Walmart executives have made the decision to extend their online retail presence by acquiring social media ecommerce solution provider, Kosmix for $ 300 million. This will allow the company to reach customers via the Internet and through other commerce options. Kosmix is known for the development of three well-known, widely used social media services:
Tweetbeat is a web entity that organizes tweets for the most popular topics and events in a real-time updating environment. Examples of updated topics include, breaking news and sports scores. Kosmix.com acts as an online encyclopedia that allows users to learn about a variety of social media and networking topics. Finally, RightHealth is another website that holds medical and health information.
The current owners of Kosmix also developed one of the first online shopping venues, Junglee, in the mid-to-late 90’s. This website was purchased by Amazon in 1998 for $ 250 million. The two owners also assisted with the development of Amazon’s Mechanical Turk crowdsourcing service and invested in Facebook which helped it explode in 2005.
Ecommerce is close to transitioning from the first generation of bringing the store to the web to the second generation of developing integrated experiences using the online store, the web and mobile devices. Individual customer social identity will be the glue that holds these three experiences together.
Therefore, with the vast resources Walmart boasts, they can really take ecommerce to the next level. Given the portfolio of Kosmix, it looks as if Walmart is attempting to expand their monopoly to Twitter, Facebook and other social media outlets. Therefore, the goal of this acquisition could be to change their image and appeal to a younger, more technology-driven crowd, possibly creating customers for life.
Whatever plans Walmart has in store; they have completed a transaction that will be hugely beneficial to them in the future. It is sure to expand their customer base and thus annual revenues. If this venture proves to be successful, it is possible many land-based retailers will refer their customers to a digital shopping cart on a social media website.
As the largest retailer in the world, when Walmart acquires a business, the competition is keeping a close watch to see the result. Walmart is a trend-setter in retail and what may soon become online retail. Therefore, this acquisition could set a new trend among retailers in land-based and ecommerce stores.