Three times a charm: With Silicon Valley partner in hand, retailer now poised to grow in cyberspace

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Something curious happened to Wal-Mart on the way to the e-store.

Wal-Mart got onto the Net in 1996, but then failed to keep up. It came back in January, but with an entirely underwhelming redesign. Now, however, Wal-Mart Stores has a savvy new partner in Silicon Valley and is preparing a massive restaging online.

Retail and e-tail rivals have reason to worry, for Wal-Mart, belatedly, seems to get the Net.

"We've got a million ideas," says Tom Stromberg, chief information officer at "We want to tap the 10 million (people) who today buy every week at Wal-Mart."

The nation's largest retailer opened its doors on the Web with an adequate site four years ago. But time stood still for Wal-Mart as and others refined and advanced their sites. finally unveiled a much-anticipated redesign in January. The retooled site offered bulk -- with almost a quarter of a million products -- but broke no new ground in technology or customer service.

"They just sat there and let the rain fall on them," says Kurt Barnard, president, Barnard's Retail Trend Report. "Then, they decided to move into the current century."


The Wal-Mart culture has kicked in. The retailer historically knew how to turn to others when it didn't have the know-how to do a job well. When it went into groceries in its superstores, it hired a wholesale grocer it eventually bought. It turned to Federated Department Stores' Fingerhut Business Services for Internet-order fulfillment. It installed McDonald's inside Wal-Marts -- before deciding to set up its own in-store diners.

So just days after relaunching its site two months ago, Wal-Mart joined with venture capital firm Accel Partners to form a new company,, domiciled in the decidedly un-Wal-Mart city of Palo Alto, Calif., a different planet from the retailer's home town of Bentonville, Ark.

The advantages of the move go beyond simply being able to tap Silicon Valley's technology and culture. They extend to the ability to offer equity to top talent.

The new venture is searching for a CEO, with Accel partner Jim Flach serving as acting CEO, and just starting to lay the groundwork for the new site.

Meanwhile, Wal-Mart is helping customers get online. The company in December struck a deal with America Online to sell co-branded Internet service, with plans to focus on towns that lack local access. Four of every 10 towns that have a Wal-Mart are not connected to the Net, company officials say.

One thing is certain with the now under development. It will be fully integrated into a clicks-and-bricks operation.

Think surf and turf: Cyber customers will be urged to stop at the store, and store customers encouraged to shop in cyberspace. Belatedly, the Wal-Mart of the Web will emerge.

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