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Walmart Labs feels the Luv(ocracy)

July 30, 2014

Yesterday, Walmart Labs announced it had acquired Luvocracy, an online community that helps members find products based on the recommendations of family, friends and other influencers. Members can then make purchases without leaving the site. What makes this Walmart Labs' purchase different is that it promptly shut down Luvocracy to the public after the deal was announced (terms of which not made public).

Walmart's "idea incubator" appears to have made the deal to hire Luvocracy's staff of 16 including its senior staff:

  • Nathan Stoll, CEO and co-founder, a former product manager at Google who worked on AdWords, Suggest and News;
  • Brooke Thompson, VP of design, who was senior director of design at Yahoo!;
  • Christine Martinez, creative director, who is a Pinterest "Power Pinner" with over five million followers and author of "The Complete Idiots Guide to Pinterest Marketing";
  • Ajay Agrawal, VP of engineering, who previously served as SVP of engineering at Blurb and also worked at eBay, Microsoft and Oracle.

In a post on The Walmart Labs' Blog, Ben Galbraith, VP of global products, wrote, "We're excited to have this super-talented team bring their knowledge and experience to help us redefine the shopping experience of the future. I can't wait to see the ideas we've been cooking up together come to life in our properties around the world."

A post on the Luvocracy Blog included this: "We're incredibly eager to take our learnings and discovery-based shopping experience to an audience of over 140 million weekly shoppers online and in-stores at Walmart. Under the @Walmart Labs banner — Walmart's innovation hub in Silicon Valley — we're excited to help Walmart shoppers make better and more inspired shopping decisions — potentially a whole new way to shop and experience Walmart.com."

Since its founding in 2010, Walmart Labs has acquired 15 companies. The Luvocracy acquisition is Walmart Labs' fourth of 2014. In February, it acquired Yumprint, a recipe discovery and meal planning service. That preceded the acquisition of Adchemy, an online product search company, in May and Stylr, a company that created a mobile app to help consumers find clothes they like in nearby stores.

FINANCIALS:     [NYSE:WMT] [ ]

Discussion Questions:

What do you think of Walmart Labs' decision to acquire Luvocracy and then shut down the site? Is Walmart Labs having a positive effect on Walmart's business?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How likely is it that Walmart Labs' acquisition of Luvocracy will have a positive effect on redefining the shopper experience in Walmart-owned stores or websites in the future?

Comments:

These acquisitions are bold moves by Walmart; an attempt to keep pace with the nimble, creative, hyper-speed of the Internet. The key will be how well the retail giant is able to integrate the ideas that come out of these acquisitions into their websites. Will the size and bureaucracy of the company stymie people used to working in fast, flexible environments or will it embrace and rapidly employ their ideas?

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Max Goldberg, President, Max Goldberg & Associates

First and foremost, the purchase decision of Luvocracy was made by Walmart Labs. Walmart Labs is located in the Bay Area of California, not Bentonville. This purchase is yet another sign that Walmart is serious, and investing heavily in reinventing itself for omni-channel.

Despite all of its cash, Walmart is like most traditional store based retailers — they are lacking the kind of talent needed for social and e-commerce. The immediate shut down of Luvocracy's website after purchase makes perfect sense. The purchase was all about critical talent acquisition needed for innovation at Walmart Labs.

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Chris Petersen, PhD, President, Integrated Marketing Solutions

Walmart will learn a lot from the Luvocracy data files. With their IT's ability to sift for market insight, they will gain a new and more modern market awareness for what's hot and what's not. As for the talent pool, we will see how well these entrepreneurs can fit into the world of machines. I suspect that the real creators among them will feel somewhat smothered working in a rather rigid corporate system and leave at the end of the contract for the freedom they are now comfortable with. Of all of Walmart's endeavors, the creation and execution of Walmart Labs is the most interesting to date. As long as they can keep within budget, the Labs division will be a force to reckon with for the foreseeable future.

'gjarnoldjr'

Good move by Walmart to leverage very talented people. Luvocracy was not doing that well as a shop and Walmart came to their rescue—leveraging the people vs. thinking about creating more ways to influence shoppers via the Luvocracy site.

Walmart Labs is not some huge retail operation. It is an engine for ideas that will help Walmart serve their shoppers better across all channels.

Five years from now you will hear the name "Walmart" and you will not think just stores. Walmart is taking on a new "shape" designed to serve its true shoppers.

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Tom Redd, Vice President, Strategic Communications, SAP Global Retail Business Unit

I suspect that there's a really dysfunctional culture clash between the Walmart Labs techies on the West Coast and the folks who really run the company (i.e., the brick-and-mortar operations).

All retailers feel this tension to some extent, but none more than Walmart, which has steadfastly refused to do anything with its customer-level data (i.e., along the lines of a loyalty program). Until they are willing to do something like that, the techies are just spinning their wheels (and wasting Walmart's dollars).

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Peter Fader, Professor of Marketing, The Wharton School of the Univ. of Pennsylvania

Walmart's/Walmart Labs' decision to acquire Luvocracy is another brilliant move by a big retailer to bring the expertise into their fold for sound, smart, exclusive use to advance their reason for existing—building customers and making sales. And you're going to see a lot more of this by the retail giants on all fronts; not just a service like Luvocracy for integrating recommendations with buying right on the spot, but having their own on-staff analytics/consultants for pricing intelligence, assortment management, dynamic pricing, socials, shopping features, etc.; acquisitions whose energies will be devoted to one thing—advancing the company who was smart enough to buy them.

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Naomi K. Shapiro, Strategic Market Communications, Upstream Commerce

I really didn't know what to think about this move. I read what everyone here has had to say and for the most part, everyone thinks it was a smart move. On the surface, I agree. The fact that Walmart has a lab and is making this kind of investment should be key to their future. But (and that's a big "but") ...

Where's the beef? After all the investments over the past four years, what have we seen come of it? Let me see, Walmart decided to build their own search engine. Help me out folks. They have all this talent, cool start-ups but no visible transformation into the stores or online.

Maybe I've missed something, but that's my two cents!

Lee Kent, Let's meet share and succeed in Retail, YourRetailAuthority

I guess they are looking for LUV?

Money can't buy affection and that is what Walmart lacks. Genuine feeling for the place. You shop Walmart because you have no other choice, not because it evokes warm fuzzies.

Kate Blake, Social Media Manager, Take Five with Kate Blake

In agree with the earlier comments. Lee's comments are most striking. She is right. Walmart buys and closes these brain tanks; but nothing substantial has hit the store level. Are we waiting for a surprise?

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

Most of the comments here have been positive—much more so than the Poll would suggest—so I'm going to (try to) offer another view. If WMT made this acquisition with the thought that they're really acquiring the people, then I think they made a mistake...they may have caught them, but I doubt they can keep them.

Oh sure, they've been seduced by the glamour of the Walmart name, and it's in the Silicon Valley—except not really: it's in San Bruno, a city mostly known locally for having been devastated by a pipeline explosion—but it's not the heart or brain of the Valley as much as maybe the kneecap or something. In, short, it's the tech equivalent of having been drafted by the Padres.

So though I wish everyone well, I doubt we'll see many of those 16 sticking around for long.

'notcom'

These acqui-hires are common in the tech world, and clearly a key strategy for Walmart.com. When you're competing with Apple, Facebook, and Google for engineering talent, giving a talented team a soft landing (with an earn-out or similar retention strategy) is perhaps the path of least resistance and highest ROI from a talent acquisition point of view.

I echo Peter's comment on internal competition between dotcom & HQ—an issue for most multi-/omni-channel retailers, even when both functions are co-located. The ideation and inspiration of many "labs" is important, but less important than finding the occasional scalable capability that will move the needle for a large, established retail business. Beyond the technical issues, there are major organizational culture and structure barriers to be navigated in order for new ideas to be implemented, and this is amazingly difficult when corporate siblings are viewed as competitors.

I do admire Walmart's ongoing efforts to build vs. rent. Digital "real estate" is increasingly valuable, and Walmart seems to appreciate that its competitive advantage diminishes if it borrows the same 3rd-party capabilities that the vast majority of its competitors rely on in the digital arena.

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Keith Anderson, VP, Strategy & Insight, Profitero

Part 2: I think that many of my BrainTrust colleagues missed the bus on this one. Walmart is doing what ALL major retailers are doing these days—building their companies from the inside out, buying and using the most modern, accepted, effective, already established and proven companies for communication, management, intelligence, socials, website management, customer service, analytics, you-name-it, etc. Location of the Lab has absolutely NOTHING to do with developing and applying these techniques. And just because you don't see it doesn't mean that it's not integrated into their system, and working for them in positive ways that they need not reveal to their competition.

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Naomi K. Shapiro, Strategic Market Communications, Upstream Commerce

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