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Wal-Mart's Online Offensive: Taking Aim at Amazon, eBay

BRISBANE, Calif. ( TheStreet) -- Wal-Mart Stores (WMT - Get Report) strikes fear in its competitors whenever it rolls out a new initiative. But with the addition of vendors to its Web site it is taking aim at some new rivals: (AMZN - Get Report) and eBay (EBAY - Get Report).

The behemoth retailer announced on Monday that it is adding one million new products to its Web site by teaming with outside vendors. The new items will come from vendors that include CSN Stores, Pro Team and eBags, expanding Walmart's offerings in home, baby, apparel, sporting goods and toys.

Moving forward, Wal-Mart says it plans to pair with more vendors -- a strategy that could pose a threat to online market places like Amazon and eBay.

Sell Ebay!: Against the Grain

Of course with only three outside vendors, its current threat to these other third-party sites is minimal. But if the discount giant lives up to its word and does add more vendors, a pinch will surely be felt. attracted 33 million unique U.S. visitors in July, compared with 67 million for Amazon, according to Compete, a market research firm. Amazon and Wal-Mart ranked first and second, respectively, among retail Web sites during the month.

eBay outpaced both sites, with 70.5 million unique visitors during the month, according to Compete.

Wal-Mart ranked the 14th largest online retailer in 2008 with $1.7 billion in sales, according to Internet Retailer. In comparison, Amazon was No. 1, with $20 billion in sales.

Indeed, Wal-Mart's marketplace might pose a bigger threat to eBay than it does to Amazon. eBay's core business is selling third-party goods, while Amazon has additional sources of revenue, including running Web sites for other companies, such as Marks & Spencer and Timex. Amazon's Fulfillment by Amazon service, which allows third-party retailers to outsource the billing and shipping of products, is a big draw. Wal-Mart's new site will not offer this perk. Neither does eBay.

Amazon has also ranked in the top three sites for customer satisfaction, while eBay has been consistently berated for its service.

Ultimately, if Wal-Mart's third-party initiatives are successful, thatcould open the floodgates for other retailers like Target (TGT - Get Report), Sears (SHLD - Get Report) and Best Buy (BBY - Get Report) to create their own marketplaces.

Still, with many retailers lagging behind the online retail trend, it will presumably be some time before Amazon and eBay truly need to worry.

-- Reported by Jeanine Poggi in New York.

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Copyright 2009 Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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