Shopping App Stylr – Yet Another Acqusition For @WalmartLabs

Wal-Mart‘s (NYSE:WMT) digital technology unit @WalmartLabs has agreed to buy mobile app Stylr for an undisclosed amount, in order to bridge the gap between online and store channels. The app, which allows smartphone users to locate clothes in a nearby store, is @WalmartLabs’ 13th acquisition in the last three years. ^[1] Founded in 2011, @WalmartLabs has been aggressive in leveraging social media and other technologies to reach prospective customers through online and mobile channels.

Wal-Mart established @WalmartLabs when social media companies started gaining popularity and online retailers such as Amazon (NASDAQ:AMZN) started becoming a threat for the retailer’s store business. Since its launch, the unit has made several acquisitions such as Inkiru, OneOps, Tasty Labs, Torbit etc., to reinforce its e-commerce platform. @WalmartLabs’ latest acquisition, Stylr, will allow the retailer to attract and assist tech savvy customers who use their smartphones while shopping. This acquisition appears to be an important step towards the development of Wal-Mart’s omni-channel platform, which refers to providing a seamless shopping experience across all available channels. Over the past few years, Wal-Mart has deployed several major initiatives on this front such as direct shipping from stores and “pay with cash” services.

Our price estimate for Wal-Mart stands at $79.30, which is less than 5% ahead of the market price.

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@WalmartLabs Has Been Aggressive With Acquisitions

The world’s largest retailer, Wal-Mart, established @WalmartLabs in order to develop a best-in-class e-commerce platform and leverage the growing influence of social media over customers’ buying decisions to enhance its sales. In 2011, the retailer bought Kosmix, a social media start-up focused on e-commerce, and integrated it with @WalmartLabs. Kosmix filters information from various social media websites by topic, aggregates the relevant information and provides it to customers. Since social media is gradually replacing broadcast media as a credible source of information related to various products and services, using Kosmix allows the retailer to promote its products in a highly visible and influential environment. ^[2] Other small acquisitions by @WalmartLabs to bolster its social media presence include OneRiot and Social Calender.

In November 2011, Wal-Mart acquired Australian start-up Grabble, a maker of point-of-sale technology that integrates with mobile phones. Grabble developed innovative eReceipt solutions that provided Wal-Mart shoppers an instant access to digital receipts via their mobile phones. A month later, @WalmartLabs bought Oregon based mobile agency Small Society, to develop mobile apps for the retailer. In May last year, the technology unit added software development shop TastyLabs to its portfolio mainly for its talented founding members – Nick Nguyen and Paul Rademacher. Mr. Redemacher  created the first version of Google (NASDAQ:GOOG) maps mashup (later hired by Google) and Mr. Nguyen held a leadership position with Mozilla. Both individuals now hold important positions within Wal-Mart’s customer experience and mobile segment. ^[3] In the same month, @WalmartLabs acquired cloud computing firm OneOps for its Platform-as-a-service (PaaS) capability. OneOps mainly develops tools for firms who use cloud services for their applications, and Wal-Mart bought it to accelerate its private cloud infrastructure-as-a-service (laaS) strategies. ^[4] Wal-Mart took another step on this front when its bought Torbid, a cloud-based website accelerator in July 2013, to make its e-commerce website faster and convenient. ^[5]

All these acquisitions were aimed at enhancing Wal-Mart’s online capabilities in order to draw in more customers and provide them with a seamless shopping experience. At present, online sales account for just 2%-3% for Wal-Mart’s overall sales, but @WalmartLabs aggressive efforts are likely to drive this figure higher going forward. As it is, given the size of Wal-Mart, this is a large business.

Stylr Acquisition Indicates Wal-Mart’s Focus On Omni-Channel Retailing

Mobile app Stylr allows smartphone users to find a nearby store which stocks products they are interested in. In a way, it bridges the gap between online and store channel by leveraging customers interest in smartphones to drive store traffic. @WalmartLabs’ acquisition of Stylr will enable it to use latter’s technology to develop future mobile apps and these will help Wal-Mart attract smartphone users to its stores. About 65% of the retailer’s customers use smartphones, which implies that it has a large audience to target. Moreover, about 80% of Wal-Mart’s shoppers are under 35 years of age, an age group that tends to use their smartphones more frequently while shopping. The company’s own mobile apps have certain features that guide shoppers to its stores, and Stylr’s technology can bring in more innovations that will further strengthen Wal-Mart’s mobile apps. ^[1]

Omni-Channel retailing has become a prominent trend in the U.S. retail industry, and several retailers have boosted their investments in mobile technologies since mobile devices serve as the strongest medium to drive store traffic through the Internet. The acquisition of Stylr in itself is not a big development, but it does reflect Wal-Mart’s continued focus on omni-channel retailing.

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1. Walmart’s Innovation Lab Acquires Shopping App Stylr, Inc., Jun 17 2014 [↩] [↩]
2. Wal-Mart Buys Social Media Firm Kosmix, The New York Times, Apr 19 2011 [↩]
3. Acquisitions, @WalmartLabs [↩]
4. @WalmartLabs Acquires Cloud Computing Startup OneOps & Delicious Founder’s Tasty Labs, Techcrunch, May 14 2013 [↩]
5. Faster is Better: How We’re Optimizing Walmart.com, @WalmartLabs, Jul 24 2013 [↩]