Wal-Mart Stores Inc.’s early awkward attempts to master social media failed, but the retail giant isn’t letting that stand in its way. The company on Tuesday said it has agreed to acquire Mountain View, Calif.-based Kosmix, the developer of a social media technology platform that filters and organizes content in social networks to connect people with real-time information that matters to them. The purchase price was not disclosed.
This story first appeared in the April 19, 2011 issue of WWD. Subscribe Today.
Kosmix founders Venky Harinarayan and Anand Rajaraman will operate as part of the newly-formed @WalmartLabs, based in Silicon Valley. Wal-Mart plans to expand the @WalmartLabs team and expects the new group to create technologies and businesses around social and mobile commerce that will support Wal-Mart’s global multichannel strategy, blurring the line between bricks-and-mortar stores and e-commerce.
Early pioneers of online shopping, Kosmix’s Harinarayan and Rajaraman’s first company, Junglee, was acquired by Amazon.com in 1998. Kosmix has been working on a social genome platform that captures the connections between people, places, topics, products and events as expressed through social media, be it a feed, a tweet or a post. “It became apparent to us that this [social genome] platform could transform e-commerce by providing an unprecedented level of understanding about customers and products, going well beyond purchase data,” said Rajaraman. “The social genome enables us to take search, personalization and recommendations to the next level.”
Personalization has become a buzzword in e-commerce and mobile commerce, with experts saying the key to higher sales is to more accurately target consumers’ wants and needs.
Social genome drives Kosmix’s sites, including TweetBeat, a real-time social media filter for live events; Kosmix.com, a site to discover content by topic, and RightHealth, which, according to the company, is one of the top three health and medical information sites by global reach. The three properties in March together attracted more than 17.5 million unique visitors worldwide, Kosmix said. As for whether the retail giant will use the three Kosmix sites, a Wal-Mart spokesman said, “We haven’t made a determination about that at this time.”
Wal-Mart’s earlier forays into social media were less than home runs. Its Walmarting Across America blog in 2006, about two Wal-Mart enthusiasts traveling around the U.S. in an RV, was revealed to be less than authentic when it was learned that Wal-Mart paid for the flights, the RV and the gas of the two protagonists. “The Hub,” a MySpace-like clone, closed in October 2006, just 10 weeks after it launched, while a Wal-Mart sponsored Facebook group reportedly had lackluster results.
“Social networking and mobile applications are increasingly becoming a part of our customers’ day-to-day lives globally, influencing how they think about shopping, both online and in retail stores,” said Eduardo Castro-Wright, Wal-Mart’s vice chairman. “We are excited to have the Kosmix team join us to accelerate the development of our social and mobile commerce offerings.”
Wal-Mart operates retail businesses in 15 countries and e-commerce businesses in nine countries.
In other Wal-Mart news, in its definitive proxy, filed Monday with the Securities and Exchange Commission, the company reported that total compensation for Mike Duke, its president and chief executive officer, fell 2.7 percent to $18.7 million, from $19.2 million in 2009, as the world’s largest retailer fell short of its objectives for sales, operating income and return on investment.
Duke’s salary rose 2.5 percent to $1.2 million but his stock awards declined 0.5 percent to $12.7 million as Wal-Mart’s adjusted ROI fell just short of the 19.21 percent target, and adjusted sales, targeted for a 3.6 percent increase, rose 2.4 percent. Stock payouts are based on the average achievement of performance targets over a three-year period so the shortfall in 2010 will impact Duke’s compensation through 2012.
Bonus cash — technically “nonequity incentive plan compensation” — was the area that most affected Duke’s pay package. With Wal-Mart falling slightly below the 5 percent growth in operating income set as the target, at 4.8 percent, Duke’s bonus fell 19.8 percent to $3.9 million from $4.8 million in 2009.
Qualifying as a named executive officer for the first time, Bill Simon, president and ceo of Wal-Mart U.S., earned a total of $14.1 million, including $802,000 in salary, $951,000 in bonus cash and $12.2 million in stock awards.
Companies are required to report the stock and option awards earned by their named executive officers in a given year but, because of vesting schedules and changing stock prices, these awards aren’t necessarily realized. Wal-Mart gave no option awards last year, in 2009 or in 2008.