Walmart is racing to become Amazon before Amazon can become Walmart

Retail giants Amazon and Walmart are increasingly borrowing from one another to fuel a new stage of growth.

Most recently, Walmart began testing an initiative to store third-party marketplace merchandise in the backrooms of some of its supercenters, The Financial Times reported on Sunday, and Walmart confirmed to Business Insider.

“Starting in a few markets, we’ll soon be offering a select assortment of marketplace items through the pickup and delivery experience customers already know and love,” a spokesperson said.

The move further encroaches on Amazon’s traditional territory — the e-commerce giant popularized the idea of third-party marketplaces — while Amazon is also toeing into Walmart’s turf with its own version of Supercenters.

Walmart’s new strategy allows a larger selection of products to be available at the ultrafast delivery speeds that customers routinely get on items typically available in a local store, like groceries or apparel. Typically, this third-party merchandise is stored and shipped from other Walmart facilities that don’t have the same speed advantages as its growing fleet of 4,600 retail stores.

It also ties into two other long-term projects the company has been working on: redesigning stores and automating supply chains.

In the first case, the new store designs feature larger e-commerce fulfillment spaces. In the second, AI-powered warehouses are sorting items before they are shipped to a store, allowing organized pallets of products to go straight from the truck to the shelf for restocking.

Both initiatives create extra space for storing and shipping items sold by Walmart Marketplace sellers — and more sellers make Walmart even more Amazon-like.

Both giants are branching out after mastering their own games

Building a really big business typically requires a sharp focus on a primary lane.

Walmart mastered physical retail by putting roughly 120,000 more commonly purchased items (and other services) under a single roof, located within a short distance of 95% of the US population.

Amazon dominates e-commerce thanks to the power of its platform and fulfillment capacity, enabling it to offer millions of unique items through a single marketplace.

Now, both are branching out after conquering their own games.

In recent months, Amazon has doubled down on its push to reach more rural customers with new facilities in smaller communities.

The company is also piloting a smaller-format fulfillment center stocked with more frequently purchased products, which it says will shorten delivery times to as little as 30 minutes.

And there’s the supercenter-style warehouse-and-store combination in the works, which is expected to offer groceries, general merchandise, prepared foods, and other services. It’s the e-commerce company’s latest foray into physical retail, an area where it’s had mixed results.

It’s clear that the race is on to see if Walmart can become Amazon before Amazon becomes Walmart.

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