Lee referenced a startup called RentTheRunway, which rents designer dresses. She showed how this startup used data in order to vastly improve its service to consumers.

As Lee put it, building a data driven culture is "happening at the smartest online companies these days." As an example, she referred to LinkedIn, which hired DJ Patil as its Chief Scientist. Patil built up a team of 200 people - including data scientists, product engineers and more. One of the products to come out of that group was the 'people you may know' feature.

RentTheRunway ("love. wear. return.") implemented a data culture too. After analyzing how customers rented dresses online, it concluded that there are 19 variables that are important. Those include color, designer name, dress length, time of year, occasion/purpose, age of renter, body type, neckline, model wearing dress, price.

Lee noted that it's really hard to tell, just from looking at the dresses online, which of those dresses are the most popular amongst its users. Instead, she said, "you have to rely on the data."

Another of Kleiner's online retail startups, One Kings Lane, has reduced customer acquisition costs by 30%, "just by playing Moneyball."

Two other themes that Kleiner Perkins has noticed: First, big data by itself is not enough - it also has to be real-time. Second, it's not just startup employees who should tap into and use this data. The every day consumer should be able to self-serve and use the data too.

The tagline of @WalmartLabs is "Social + Mobile + Retail" and it's an indicator of where Walmart wants to go with the technology it acquired. Walmart wants to tap into social data - for example from Twitter - and entice mobile phone toting customers to its stores. Walmart also wants to beef up its online operations, traditionally a laggard compared to Amazon.com.

Kosmix started out as a "vertical search" product in 2005/06, with health as the proof of concept. It was world class search technology, but in many ways Kosmix was conducting its own search - for the right business application.

We profiled a group of similar "search 2.0" companies at the end of 2006. There was no doubting the class of Kosmix though, even in such a crowded field. In 2008, ReadWriteWeb named Kosmix one of our Top 10 Alternative Search Engines.

Kosmix in October 2005, courtesy of the Wayback Machine

It was the rise of social media, with its noise and need for real-time analysis, that finally opened up business opportunities for Kosmix. Also key was mobile technology and a return to the founders' roots in online shopping. It all led to the $300 million acquisition by Walmart this year.

An article in Mercury News explains how social media data from the ex-Kosmix product might be used:

"That information could be used to steer shoppers to products based on their hobbies, for instance. Or the Kosmix technology could be used to analyze Twitter tweets in neighborhoods surrounding specific Walmart stores. That intelligence could help store managers decide on inventory. Should they expand their sporting goods department or maybe their video gaming offerings?"

It remains to be seen how well @Walmart capitalizes on the trends of social media and mobile, but in Kosmix's founders they certainly have the right people leading this online push. As Anand Rajaraman wrote in his announcement of the acquisition in May:

"We are at an inflection point in the development of ecommerce. The first generation of ecommerce was about bringing the store to the web. The next generation will be about building integrated experiences that leverage the store, the web, and mobile, with social identity being the glue that binds the experience."

This is a wonderful startup success story. But do you think Walmart will make the best of Kosmix's technology and online shopping nous? Let us know in the comments!

Email Marketing a Top Priority

Those companies that are seeing the current downturn as a chance to expand and that are planning to spend more on their online efforts this year, say that they will focus their investments on search (80%), email (65%), and social marketing (60%). According to this report, these businesses see email as one of the most important means to communicate with their customers and most plan to use it to inform customers of new product launches, promotions, and to get customer feedback. 90% of all respondents listed a focus on email marketing as a top priority.

Companies Won't Scale Back Social Media Campaigns

Interestingly, the study also found that those companies that are growing faster than expected during this downturn are also more likely to embrace social media. Even those companies that are planning to scale back their online operations this year still plan to experiment with social media campaigns.

Imaged used courtesy of Flickr user jakerome.

It is important to point out, however, that not every site is doing so well. Just yesterday, Compete listed some of the biggest winners and losers among online retailers during the first two weeks of December. While the online photo service Snapfish, for example, saw its business grow by 57%, its competitor Shutterfly saw its traffic decline slightly by -1% (though chances are that Oprah effect played a significant role here as well). Abercrombie.com lost over 23%, Blockbuster 22%, and 123inkjets.com 86%. The popular online electronics retailer Newegg.com, on the other hand, saw its traffic grow by almost 100%.

While a lot of daily traffic itself doesn't necessarily translate into great sales, Compete's data fits in well with a recent report from CitiGroup (pdf), which reported a healthy growth at Amazon and Buy.com in December 1-15 sales, though this growth was mostly driven by advertising and aggressive discounting. JupiterResearch also came to a similar conclusion earlier this month.

We will have to wait until the end of the holiday shopping season to draw any final conclusions from this data (especially with regards to actual sales), but so far, it looks like at least the larger online retailers might be bucking the overall economic trends.

Borders Site Design

The site design may remind users of Shelfari, a social book sharing service to connect readers with similar interests. On the homepage of Borders, the latest books are displayed on a virtual shelf called "The Magic Shelf". When you first head to the site, users can interact with the shelf to see the latest book releases and more. For registered users, the magic shelf is customizable with the option to view books, DVDs, and music from select genres. The shelf design also extends over to the recommendations page for easy browsing. All in all, the interface is clean and doesn't appear to be cluttered. Borders design UI beats Amazon's by a mile and provides customers with a clean and unique experience instead of clouding the front page with recommendations and news.

Borders Media

Borders also dives into media with Borders Media. Borders Media provides a section for customers to watch live store performances on Borders Live at 01, famous chefs at work in the Borders Kitchen, and living room book discussions with authors on the Borders Book Club. The user interface is consistent with the homepage design, making the site easy to navigate.

Stiff Competition

Borders supplies a host of deals and discounts for those that shop at the retailer's site. We think this will be one of the key strategies against giant competitors such as Amazon and Barnes and Nobles along with their competitive pricings. With their competitors already well established online, it will be interesting to see what else Borders cooks up. Another thing we appreciate is the direction Borders took with their site design. Borders made a very smart move by not competing with Amazon and Barnes and Nobles when it comes to site design, and opted for something users may find refreshing. So far, Borders has made a lot of the right moves in order to compete.