Wal-Mart Buys Kosmix, Our Take

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WalMart (NYSE:WMT) recently announced that it will be buying the social media company Kosmix. As TechCrunch describes, Kosmix “enables users to filter and organize content in social networks, in order to connect people with information that matters to them, in realtime”. [1] Wal-Mart is the world’s largest retailer, and competes with other big-name retailers like Target (NYSE:TGT), Costco (NASDAQ:COST), Amazon (NASDAQ:AMZN) and Best Buy (NYSE:BBY).

The aim here is clearly to leverage the trend of social media commerce to stimulate online sales. Wal-Mart’s efforts are more serious than just buying a small and relatively new company. Kosmix will be operating as a part of a newly created group, @WalmartLabs, which will focus on online shopping. [2]

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We believe that this acquisition is not just about leveraging the technology of Kosmix, but also about acquiring its talent, which has proven record of creating successful technology – the founders of Kosmix sold their first company to Amazon in 1998. [2] As store expansion reaches saturation in the U.S. and competition intensifies from other retailers like Amazon, it makes sense for Wal-Mart to promote online sales and attract more customers by leveraging social networks to target them more efficiently.

See our complete analysis of Wal-Mart stock here

Notes:
  1. Walmart Ventures Into The Social Media Space With Acquisition Of Kosmix, TechCrunch, Apr 18 2011 []
  2. Wal-Mart to buy social media firm Kosmix, Reuters, Apr 18 2011 [] []