Wal-Mart Is Making Friends With Facebook

The Internet has been a weight hanging on the necks of brick-and-mortar
retailers. Online retail already has knocked off Circuit City and Borders. Even
top operators like Best Buy (NYSE: BBY ) and Wal-Mart (NYSE: WMT ) look shaky.
The omnipresent threat is Amazon (NASDAQ: AMZN ), which continues to
relentlessly push forward. Its Kindle Fire tablet computer is selling at a rapid
clip and should provide Amazon a strong platform to capture even more
marketshare. Can the traditional players fight back? Well, theyre trying.
Wal-Mart, which already is getting web traction from its video streaming
service, Vudu which hopes to elbow in on Netflix s (NASDAQ: NFLX ) world now
is hoping to make an online splash through social media. This week, the company
launched a partnership with Facebook in which Wal-Mart will emphasize the local
namely, more than 3,500 stores will have their own individual Facebook pages.
Now, this will be more than just a bulletin board for deals. Rather, Wal-Mart
will leverage its 9 million Facebook fans to learn from their interests. The
result should be more personalized offers, which are based on a user's social
graph. Sounds kind of out-of-character for the dowdy Wal-Mart, right? Perhaps.
But the company does have a long history of relying on sophisticated
technologies, such as with its extensive logistics platform. And with the added
data from social networking, Wal-Mart should be able to wield even more
precision with its inventory and merchandising. After all, Americans spend lots
of time on Facebook, and they definitely are willing to share their opinions.
Still, the Facebook initiative is not a cure-all for Wal-Mart. If anything,
social media still is in its relative infancy, and its hard to differentiate
actual commercial potential from hype. How sustainable is the "like" button
when it comes to branding and targeting? In the meanwhile, Wal-Mart still needs
to worry about other brick-and-mortar rivals, including warehouse giant Costco
(NASDAQ: COST ) and deep discounters Dollar General (NYSE: DG ) and Dollar Tree
(NASDAQ: DLTR ). That said, its probably not a good idea to jump into WMT just
because Wal-Mart jumped into cahoots with Mark Zuckerburg. The company has
posted declines in same-store sales for the past nine quarters, and while
Wal-Mart has plenty of motivation to get serious about its digital efforts,
theres no way of knowing whether this approach will grow Wal-Marts business
again. Tom Taulli is the author of "All About Short Selling" and "All
About Commodities." You can also find him at Twitter account @ttaulli. He does
not own a position in any of the stocks named here.