Walmart is escalating its competition with Amazon by transforming store back rooms into staging areas for third-party merchandise. The retail giant aims to deliver marketplace orders on the same day, directly challenging Amazon's dominance in speedy e-commerce fulfillment. This initiative leverages Walmart's physical footprint as a strategic advantage against its online rival.

While Walmart's marketplace generates about $14 billion in US sales—growing at 20% annually—it remains dwarfed by Amazon's $333 billion in marketplace revenue. The retailer's growth rate highlights the potential in expanding its third-party offerings. Executives view the thousands of stores as crucial hubs for rapid delivery, with over a third of orders arriving in under three hours.

Walmart's automation of warehouse operations has freed up back room space for third-party inventory. The company is using AI to determine which items to stock locally based on demand. This strategy could help Walmart close the gap with Amazon, though analysts note the space is limited and must serve both online and in-store customers simultaneously.