Want to hear more about @WalmartLabs? Join us at Ad Age Digital
West on Sept. 20 in San Francisco where Editor Abbey Klaassen will
interview Anand Rajaraman, senior VP-global e-commerce and head of
Walmart Labs. For tickets and more info, see AdAge.com/DigitalWest
Among the factors that have played into this is technology.
Walmart has traditionally been a leader in the space, using its
Retail Link sales-data system, for example, to leapfrog rivals by
analyzing what is in its shoppers' baskets and capitalizing on
trends. But over time competitors caught up with database-driven
loyalty programs that direct discounts to consumers on items that
matter most to them, making them more targeted and price
With Walmart same-store sales now starting a third straight year
of decline, it's clear the retailer could use another tech
breakthrough or two. And it's looking to @Walmartlabs to find it.
The retailer spent $300 million earlier this year to buy Kosmix,
a startup best known for an app that tailors Twitter content to
users' interests. The app, Tweetbeat, doesn't operate anymore, but
the acquisition is really more of a nine-figure investment in
retailing, marketing and social-media R&D. Venky Harinarayan
and Anand Rajaraman, the entrepreneurs behind Kosmix, now head
@Walmartlabs, a 70-person R&D operation based in Mountain View,
Calif., as senior VPs of e-commerce for Walmart.
Previously, the two did a lot for Amazon, a Kosmix investor
before the Walmart buyout. They created Junglee and sold it to
Amazon in 1998, where it became the Amazon Marketplace of
third-party vendors that today drives 30% of the e-tailer's sales.
They also developed Amazon Mechanical Turk, a crowdsourcing site
where people sign up to do small tasks for small payments.
With @Walmartlabs, they have an arguably bolder vision. Mr.
Rajaraman says in a quote used in all the unit's job listings:
"Social media and the mobile phone will have as profound an effect
on the trajectory of retail in the early years of the 21st century
as did the development of highways in the early part of the 20th
So can @Walmartlabs let Walmart leapfrog over rivals on that
road the way the retailer's past tech mastery did?
"I hope so," Mr. Harinarayan said in an interview. "That's a
tall ask. But the good news is that the scale is so large that if
you can move the needle in a positive direction, the impact is
Meanwhile, @Walmartlabs is mixing in some smaller ideas and
projects specific to e-commerce, where the giant trails Amazon by
at least six to one. Just closing the gap with Amazon wouldn't
solve all Walmart's problems, but it would boost sales more than
"I'm a firm believer when you run a lab, if you are doing only
very speculative long-term things, you run the risk of not having
wins that help you cement your position in the organization," Mr.
Harinarayan said. So in the early going @Walmartlabs is building
the next generation of search and "helping with marketing" for
Walmart's online properties globally, he said. "Then we also have
some much more speculative, strategic, long-term-payback
opportunities that involve social media," he said, aimed at
creating better shopping experiences online and offline.
In one experimental project expected to debut for the holiday
season, @Walmartlabs has been recruiting people to test Shopycat, a
Facebook and web app that uses people's social-media profiles and
comments to generate gift ideas.
"Most of the recommendation systems you see today in online
shopping are based on prior transactions," said Mr. Harinarayan,
who worked for Amazon in the late 1990s when its system was
developed. The system works well for books, where people tend to
buy in the same genres, he said, but so much not elsewhere.
"It's our belief that more than past transactions, your
interests and what interests of yours are trending are better
predictors of what you'd be interested in buying," he said.
But where @Walmartlabs could have its biggest impact is helping
Walmart counteract competitors' loyalty programs and regain lost
ground in the battle for price perception, said Leon Nicholas,
managing director of Kantar Retail. Walmart has long rejected
shopper cards as gimmicky and inconsistent with its everyday low
price strategy. But Mr. Nicholas believes @Walmartlabs could
develop a program consistent with EDLP and incorporating
Walmart.com and mobile devices to provide deals across a wide
He suggested Walmart program members might input a shopping list
and let Walmart.com or its mobile app offer a package deal on
select brands that would be lower than buying them individually. It
might also be used to compare prices on the basket to other nearby
retailers or offer additional deals on bigger baskets. Or, as Mr.
Nicholas envisions it, a shopper with $10 or $20 in her pocket
could use a mobile app outside the store to ask for the best deal
on a bundle of products. Mr. Nicholas called the concept "EDLP for
me" and believes brands would pony up trade funds to
"What they can't do is stay in their comfort zone," Mr. Nicholas
said. "If Walmart revolutionized sales data through Retail Link,
they surely can revolutionize shopper discounts."
But all that would be a tall order, even if it were possible
"At this point, I'd say that 's not something I could comment on
because it's not in our direct path," Mr. Harinarayan said.
Walmart U.S. CEO Bill Simon in June reiterated Walmart's
longtime opposition to loyalty programs, though a spokesman
declined to comment on the "EDLP for me" idea. Others close to the
company noted longtime difficulties getting Walmart.com and Walmart
to work together, though the retailer has increasingly tried to
coordinate online and offline efforts, such as through nationwide
"site to store" shipping and a recent management restructuring.
Last month, two top e-commerce executives left Walmart's
Brisbane, Calif.-based e-commerce unit, which now reports to Mr.
Simon. E-commerce units now also report to the heads of the offline
stores in the U.K., Japan and Canada.
In the rest of the world, e-commerce continues to report to Vice
Chairman Eduardo Castro-Wright, and Walmart.com has said in job
listings it's preparing to step up online-only offerings in the
still-vast areas of the world where it has no stores, including
continental Europe and much of Asia and Africa.