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Wal-Mart gets new ammo in Web battle with Amazon

Walmart holiday shopping specials are displayed on a computer screen in New York.
Jin Lee | Bloomberg | Getty Images
Walmart holiday shopping specials are displayed on a computer screen in New York.

In its ongoing struggle to lure Web shoppers from Amazon.com, Wal-Mart has picked up a new ally: messaging start-up Tango.

As of Tuesday, consumers in the U.S. can shop for 2 million products—everything from apparel and jewelry to electronics—via Tango. A shopping tab will appear on the service allowing users to purchase products from Wal-Mart and Chinese e-commerce giant Alibaba.

The start-up has 300 million users, who turn to the app for Skype-style video chats, casual games, photo sharing and to watch the occasional live concert.

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Wal-Mart, the world's largest retailer, needs all the help it can get when it comes to online commerce. With Web traffic moving to mobile, and with Amazon owning the most popular shopping app, Wal-Mart has to start getting creative. The stock is down 9 percent this year.

For Alibaba, the Tango deal offers another way to potentially crack the U.S. market. Alibaba, already a major investor in Tango, is selling goods through its AliExpress division.

"Alibaba and Wal-Mart are dream partners," said Eric Setton, co-founder and chief technology officer of Mountain View, California-based Tango. "Our intent is to open up to more partners."

Tango app screens on a mobile phone
Source: Tango
Tango app screens on a mobile phone

Digital commerce has been a focus for Wal-Mart since 2000, when the company opened walmart.com, its e-commerce division located near San Francisco in San Bruno, California. Fifteen years later, e-commerce still accounts for less than 3 percent of the Bentonville, Arkansas-based company's revenue.

But the retail giant is still investing. Wal-Mart said in February that 70 percent of walmart.com's traffic in the holiday period came via mobile. (Tweet This)

"Customers who previously shopped using their laptops are now using their phones and tablets," Wal-Mart CEO Doug McMillon said on the fourth-quarter earnings conference call. "Around the world, we're well-positioned to create a strong mobile experience for customers this year and beyond."

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A Wal-Mart representative declined to comment.

Founded in 2009, Tango has grown from an app that helped smartphone users have video chats with their friends to a full-service social network that competes with Facebook and China's Tencent. In early 2014, the start-up raised $280 million in a financing round led by Alibaba and included funding from Yahoo co-founder Jerry Yang.

With Wal-Mart and Alibaba, Tango will get a commission for every sale generated from the service.

The Tango deal is one piece of Alibaba's effort to get traction in the U.S. The Chinese company has made big bets on ride-sharing service Lyft and e-commerce platform ShopRunner, and last week Alibaba disclosed an almost 10 percent stake in Zulily, a small but growing U.S. online shopping rival to Amazon.

Alibaba also forged an agreement with online lender LendingClub early this year to help small businesses in the U.S. finance their purchases on Alibaba in a quicker and more cost efficient way.

Read MoreAlibaba taps LendingClub to aid US expansion

For both Wal-Mart and Alibaba, getting access to Tango's user base means not only a young, mobile demographic, but also sophisticated targeting capabilities. Tango can make product recommendations to its users based on what it knows about them as well as the types of purchases their friends are making.

"Tango offers an exciting new way for consumers to access quality products on AliExpress that are relevant to their preferences and lifestyles." Leo Shen, general manager of AliExpress, said in the statement.