Wal-Mart's Multichannel Ecommerce Effort

“IN GLOBAL ECOMMERCE, we will not just be competing,” Mike Duke, the chief executive officer of Wal-Mart Stores, promised at the retailer's annual meeting earlier this month. “We will play to win.”

Wal-Mart's ambitions in cyberspace were illustrated earlier this year when the company shelled out an estimated $300 million to acquire Kosmix.com, a Silicon Valley-based start-up company that aggregates data so as to organize various Web content including social media posts, to craft what it called a “360 degree” view of a topic. This so-called “social genome project” kept track of the products people talked about and what they were saying about them.

The company — along with its founders and all 70 of its employees — was subsequently renamed @WalmartLabs and remains at the Mountain View, Calif., headquarters, albeit with a renewed vision going forward.

“Our mission is to invent the next generation of ecommerce: integrated experiences that leverage the store, the Web and mobile, with social identity being the glue,” explained Anand Rajaraman, a Kosmix co-founder, writing on his personal blog. “We are at an inflection point in the development of retailing. Social media and the mobile phone will have as profound an effect on the trajectory of retail in the early years of the 21st century as did the development of highways in the early part of the 20th century. @WalmartLabs, which combines Wal-Mart's scale with Kosmix's social genome platform, is in a unique position to invent and build this future.”

Although Wal-Mart has not shared specific details of how Kosmix would tackle these issues, it's clear in the big picture, Wal-Mart views “playing to win” to mean defeating ecommerce giant Amazon.com. “Amazon has to be taking something away from Wal-Mart,” noted Dave Marcotte of Kantar Retail, told SN. “How much, I'm not sure they know, but it has to have an effect on them.”

In remarks at an investor conference earlier this month, Raul Vasquez, Wal-Mart's senior vice president of global ecommerce, said Wal-Mart's vast size and scale provided it with multichannel advantages that “pure-play” retailers do not have, including the ability to offer same-day pickup at local stores for many online purchases and the ability to explore the possibility of home delivery from local stores. The Sam's Club division has a developed loyalty program that Vasquez likened to Amazon's “Prime” members.

An Internet offering also allows for greater selection, he noted. “What we want to try to do … is build an assortment that is millions of products, clearly much more than you could ever have in a store, and then give a customer the option either to have that shipped to their home or have it shipped to a store,” Vasquez said.

Wal-Mart this spring also announced that it had made an investment in Yihaodian, which it called a fast-growing ecommerce company based in China. This effort could help Wal-Mart position itself as a future dominator in an as-yet untapped market for Internet shopping in China, officials said.

Wan Ling Martello, Wal-Mart's senior vice president of global ecommerce in emerging markets, said the Chinese ecommerce market was growing twice as fast as the U.S., saying that underdeveloped physical retail and a rise in disposable income and broadband access in China was driving more shoppers to the Web. Online sales are expected to quadruple by 2016, she said. Wal-Mart is also looking to participate in fast-growing ecommerce markets in Brazil and India, she added.

“A new retail world is evolving and Wal-Mart is ready to embrace it,” Eduardo Castro-Wright, Wal-Mart's CEO of global ecommerce, said. “We are bringing together our brand, our stores and our global footprint with the power of the Internet, mobile technology and social networks.”