Here's a classic retail chess move: Walmart Inc. (WMT) is trying to turn its physical stores into a weapon against Amazon.com Inc. (AMZN)'s biggest advantage—delivery speed. The plan? Use the back rooms of those stores to hold products from third-party sellers, getting inventory closer to customers and cutting down shipping times. They're testing it in Dallas right now.
Think of it this way. Walmart already uses its stores as local fulfillment hubs, handling over a third of online orders for delivery within three hours. This new trial takes that a step further by bringing marketplace sellers' stock into the store network itself, rather than having it ship from external warehouses. The goal, as you'd guess, is to enable faster delivery, including same-day. It's a logistical tweak with a big potential payoff if it works.
Closing the Marketplace Gap
This delivery push is part of Walmart's larger effort to grow its third-party marketplace, which offers around half a billion items. Sellers keep ownership until a sale and pay commissions and fees. While the marketplace revenue is growing close to 20% a year, according to CFO John David Rainey, it's still significantly smaller than Amazon's behemoth.
The scale of that gap was highlighted recently when Amazon pulled ahead to become the top company on the Fortune 500, reporting $716.9 billion in annual revenue versus Walmart's $713.2 billion (which was up 4.7% year-over-year). Amazon's growth reflects its own strategic shifts, like scaling same-day delivery and expanding Whole Foods. And then there's AWS, its cloud unit, which generated $45.6 billion in operating income on $128.7 billion in revenue—contributing over half of Amazon's total operating profit. That's a high-margin engine Walmart doesn't have.
The Engine Room: AI, Automation, and Consumer Demand
To make room for this marketplace inventory in stores, Walmart has been automating its warehouses so its own goods arrive "store-ready," freeing up back-room capacity. It's also using AI tools to help decide which products to place in which stores based on local demand, though physical space is still a constraint.
The digital push is accelerating. In the latest quarter, U.S. e-commerce sales rose 27%, and global online sales were up 24%, reaching 23% of U.S. sales. That strength is getting noticed on Wall Street. TD Cowen analyst Oliver Chen said strong holiday spending led his team to raise estimates by 4% to 5% and highlighted Walmart as a top retail pick. He cited its ability to serve both higher-income and value-focused customers, its combined online and in-store strategy, and its growing retail media business—currently about $5 billion with potential for significant expansion and high margins.
In Monday's premarket session, shares of Amazon slipped 0.59% to $249.07, while Walmart edged up 0.24% to $127.80.
