What Wal-Mart Has in Store for Social Commerce

Wal-Mart’s social and mobile plans are starting to take shape only two months after acquiring Kosmix of Mountain View, Calif.

When the acquisition was first announced, it was not clear how the social start-up would fit into the retailer’s plans, but today, Kosmix’s founders have come up for air to explain what they are working on ahead of the holiday season.

First, a little background.

When Kosmix was purchased, it was building a database called the social genome project, which kept track of what people were interested in and what products people were talking about.

But it was not necessarily focused on the intersection of social and commerce, although the subjects are very familiar to its founders Venky Harinarayan and Anand Rajaraman. Before starting Kosmix, they sold their first company, Junglee, to Amazon.com in 1998, and later were privileged enough to be individual investors in Facebook.

Today, the two serve as SVPs of Wal-mart’s global e-commerce group, based in Silicon Valley. In particular, they head up a 70-person group called @WalmartLabs. (Neither company agreed to disclose terms of the acquisition; however, we heard they paid just over $300 million in cash.)

Two crazy months later, the executives say they are hard at work defining how the mega-retailer — with $419 billion in sales and 1.5 billion online visits a year to its Web site — will address the two very disruptive platforms: social and mobile.

The subject is definitely hot.

Earlier today, I wrote about some of eBay’s latest strategies to make shopping more social and how a start-up called Copious is trying to make selling items over the Internet less anonymous.

Rajaraman said while it’s unclear exactly what social commerce will mean, melding the two together is a no-brainer.

“There won’t be commerce without social,” he said. “Social shopping today is where online shopping was before Amazon came on the scene. The Amazon of the space has yet to be built.”

Rajaraman says Wal-Mart has an inherent advantage because it has 9,000 stores around the world, which generate 10.5 billion customer visits a year. It makes sense for people to use their phones in the stores to search for information about products, ask friends for advice and other social activities.

The first two concepts they are working on for Wal-Mart is around the idea of gifting and something they are calling virtual end-caps.

Harinarayan said commerce 1.0 was about the search box, but the second generation will be about knowing what a consumer wants and presenting them the options before they have to ask for them.

For instance, if you log in to the retailer using Facebook Connect, it may be able to make recommendations on what to buy a friend based on things they have liked or have discussed in their news feed.

An end-cap in the store are the items that are promoted at the end of the aisle. In the virtual world, an end-cap could be personalized email sent to you with a curated list of items that you like, similar to Gilt Groupe or Groupon.

To make these recommendations, they said they will be gathering information from people’s Twitter accounts and Facebook pages — with their permission. Rajaraman said the two social networks tend to find out different things about a person and be appropriate for different product categories.

Harinarayan said a couple of implementations will be ready in time for the holiday season. “It’s something we have to learn from,” he said. “Everyone is trying to figure this out.”

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