Walmart Buys Kosmix for $300 MM, Integrating the Social Graph into the Online Shopping Experience

In our Second Internet Report, published on March 24th, we described how Amazon, not Walmart, became the dominant Internet retailer because the core competencies needed to succeed online were ingrained in Amazon’s DNA whereas Walmart was an offline retailer at its core with a secondary focus online.

Recognizing the paradigm shift that is underway from the First Internet to the Second Internet, Walmart embraced social commerce with the $300 million acquisition of Kosmix, a technology provider that enables users to filter and organize content in social networks.  The Kosmix team will join the newly formed @WalmartLabs, which is focused on social and mobile commerce.

While we applaud Walmart’s focus on social commerce, it’s imperative that the company adopt a holistic approach to driving digital sales if it really wants to harness the power of the web and the Second Internet.  Realistically, we see little opportunity that Walmart will fully engage with Social Media.  What are the odds that CEO Mike Duke has ever been on Twitter?  About the same as the odds that Rupert Murdoch ever had a MySpace account.

Just as Walmart and most other leading offline retailers were unable to capture anything near the online share they had offline, we believe that the companies positioned to most benefit from the Second Internet are companies, like Shoe Dazzle, Yammer, and The Huffington Post, that have a singular focus on harnessing all that the Second Internet has to offer.


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