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Wal-Mart Looking To AOL For E-Commerce Boost

By Chet Dembeck
Dec 13, 1999 12:00 AM PT

According to published reports, Wal-Mart Stores and America Online are close to forging a marketing deal that would drive traffic to Wal-Mart's Web site and introduce millions of its customers to the AOL brand.

Wal-Mart Looking To AOL For E-Commerce Boost

AOL reportedly wants to ink a broad pact that would include in-store promotion of its online service in Wal-Mart's 3,600 brick-and-mortar locations, in return for promoting Wal-Mart's online store to its 20 million subscribers. Under the agreement, AOL would also assist Wal-Mart in re-launching its new and improved Web site next month.

Company officials from both companies declined to comment on the reports.

A Needed Deal

AOL badly needs this deal, both to establish a brick-and-mortar presence and to offset Microsoft's stunning deal with Tandy Corp.'s Radio Shack to promote its online service in the electronics chain's 7000 locations.

In fact, there are rumors swirling that Microsoft is trying to nix the deal by wooing Wal-Mart behind the scenes.

Under the proposed deal with AOL, the Bentonville, Arkansas-based Wal-Mart would install in-store kiosks that are linked to the Internet and target those customers who have not shopped online before. Considering the fact that Wal-Mart accommodates about 100 million shoppers per week in its stores, the positive impact on AOL's subscriber base could be significant.

Stocks Soaring

As rumors about a possible deal flourished over the last couple of weeks, Wall Street responded favorably. On Friday, shares of AOL and Wal-Mart edged up after a report from Salomon Smith Barney said a deal between the two companies appeared "imminent."

Under one scenario presented by a Salomon Smith Barney analyst, Wal-Mart would also begin selling low-cost Internet-access devices that are cheaper than PCs. AOL has already struck deals with a number of hardware makers to provide online service for such devices. For instance, it is developing a television set top box with Philips Electronics, NV that uses a new service called AOL TV.

Better Distribution For Both Parties

Currently, AOL sends out millions of its disks through the mail in a shotgun approach to increase its subscriber base, yielding only about a one percent sign up ratio.

A deal with Wal-Mart would easily increase this percentage and instantly give the brick-and-mortar giant the e-commerce presence it wants and needs.

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