The news: Walmart will offer next-day delivery in select cities for some marketplace orders fulfilled by third-party sellers, Manish Joneja, senior vice president of Walmart US marketplace and fulfillment services, told Bloomberg.

The service will be available to customers in New York City, Los Angeles, Chicago, Atlanta, and Houston, with plans to eventually expand to more areas.

Why it matters: Fast delivery is important both to Walmart’s customers and the economics of its ecommerce business.

• Shoppers are embracing the retailer’s speedier delivery options: Roughly one-third of store-fulfilled deliveries made it to shoppers’ doorsteps in three hours or less in Q2, with 20% of those orders arriving within 30 minutes.
• Expanding the range of items available for next-day delivery will make Walmart’s ecommerce services even stickier, and keep Amazon and other competitors at bay.
• The new delivery offering could also encourage more sellers to use Walmart Fulfillment Services, turning it into a more lucrative profit engine. Roughly 44% of marketplace volumes already “flow through” WFS, CFO John David Rainey said on the company’s Q2 earnings call, up 250 basis points YoY.

Our take: It’s no accident that Walmart is making a play for urban customers at the same time that Amazon is going after rural households. Both retailers see opportunities to win over the other’s core customer base by offering a compelling combination of convenience and low prices. For Walmart, the move could also unlock more spending from sellers—not just on fulfillment services, but also for its fast-growing Walmart Connect ad business.