Wal-Mart’s deal for Kosmix
The world’s largest retailer yesterday agreed to buy a little-known (beyond Silicon Valley) social media startup to better position itself with online and mobile customers.
The pending purchase of Mountain View, Calif.-based Kosmix is Wal-Mart’s latest attempt to use social media to get closer to shoppers. (Read here.) Kosmix was founded in 2005 by Internet veterans Venky Harinarayan and Anand Rajaraman with funding from Time Warner Investments, venture capital firms, and private investors, including the founder and CEO of Amazon.com Jeff Bezos. (Amazon acquired their previous startup, a price comparison search engine called Junglee in 1998.) At Kosmix they’ve designed a platform that filters and organizes content published on social networks for consumption by individual customers.
Kosmix’s founders and team will operate as part of Wal-Mart’s new digital sales division — @WalmartLabs — formed to create and develop strategies to drive traffic to the company’s online retail sites. Increasingly, referrals to e-commerce sites are coming from social networks. Observers view the Kosmix deal as an attempt by Wal-Mart to join a growing group of companies shopping for Silicon Valley firms as part of their efforts to secure new ideas and engineering talent in the exploding field of social commerce to drive online sales.
Wal-Mart, which rang up sales of more than $421 billion last year, didn’t say what it’s paying for Kosmix (except that it is “not material”). However, news reports peg the purchase price at about $300 million. Wal-Mart is working hard to build an online marketplace to rival Amazon.com and to compensate for sagging sales at its US retail stores. If the Kosmix purchase helps drive traffic to its e-commerce sites, it will be well worth the small change it cost to acquire.
Photo courtesy of Wal-Mart Stores.