Wal-Mart Pumps Up Web Sales Experience

by Mark Friedman  on Monday, Mar. 19, 2012 12:00 am  

After several failed attempts to get its customers to buy products online, Wal-Mart Stores Inc. has changed its strategy.

During the past year, the Bentonville retailer has spent hundreds of millions of dollars buying experienced social media and e-commerce companies to run Wal-Mart’s technology initiatives.

  • Last April, Wal-Mart bought the social and mobile media company Kosmix of Mountain View, Calif., for $300 million.
  • In February, Wal-Mart increased its investment to 51 percent in the Chinese online retailer Yihaodian. “It’s an e-commerce business. … e-commerce is growing so quickly, and we don’t want to get behind the curve on that at all,” Charles Holley, Wal-Mart’s chief financial officer, said during the Bank of America Merrill Lynch Consumer & Retail Conference earlier this month.
  • On March 9, Wal-Mart acquired Newput Corp. of Cupertino, Calif., for an undisclosed price. Newput’s Social Calendar offers an app on Facebook that allows users to receive birthday and holiday reminders by email and text messages. The company, which was formed in 2008, has 16 million users worldwide.

Social Calendar could play a role in Wal-Mart’s social media strategy that focuses on Facebook. In October, Wal-Mart launched 3,500 Facebook pages, one for each U.S. store, a move that has been praised by online retail analysts. (See Wal-Mart Wants You to 'Like' It.)

The acquisitions are “really about buying capabilities that we haven’t had before and operating successful e-commerce businesses,” Holley said during the conference, a transcript of which is posted on Wal-Mart’s corporate website.

Holley said that Wal-Mart’s acquisitions gave the retailer the “know-how and the people that know how to do these kind of things.”

He said Wal-Mart knew that its technology in the social media sector “has been lacking. … We haven’t been historically known for that or good for that, and we want to build an expertise in that area.”

He said that it was still too early to talk about specific plans for the social media and e-commerce products, though. But he said more information would be released in the next six to 12 months.

“It’s very early days for us,” Holley said, adding that the company didn’t yet have much information to share.

Online Sales Rising

Wal-Mart’s moves into e-commerce and social media come at a time when online retail sales are climbing. In 2010, online sales in the U.S. hit $177 billion, which accounted for 6 percent of total retail sales, according to Forrester Research Inc., a research firm in Cambridge, Mass. In 2011, online sales in the U.S. reached $202 billion. By 2016, Forrester forecasts, online sales will have grown to $327 billion and represent 9 percent of total retail sales.

Wal-Mart’s revenue for the fiscal year that ended Jan. 31 was $443.85 billion, up 5.9 percent from the previous year. But revenue in its U.S. division was up only 1.5 percent to $264.19 billion for the fiscal year that ended in January. Wal-Mart doesn’t break out online sales.

“We are very focused on not just being the price leader but making sure the customer understands that in every way possible,” Holley said in the March 7 meeting. “Not just with the real low prices but also how we use our media advertising and how we use social media and how we use the Internet.”



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