While Walmart is best known as a general merchandise discount giant, the retailer is in the midst of a big push to significantly beef up its online marketplace. On that marketplace, integrated into walmart.com, Walmart sells a wide and growing selection of merchandise from third parties that Walmart doesn’t carry in-store or take possession of–like, say, Kors luxury bags or vintage Montreal Expos cuff links.

Walmart.com is the 2nd-most-visited e-commerce site in the U.S., with 88 million unique visitors per month, according to comScore. The site currently offers 11 million different kinds of items. (That compares to about 150,000 kinds of items in a typical Walmart Supercenter, and about 260 million on Amazon.)

But as the world’s largest retailer seeks to win shoppers away from Amazon.com and eBay, it plans to add 1 million items per month to that assortment for the foreseeable future, primarily to the marketplace, which it first launched in 2009. Walmart recently finished a major overhaul of its web site that will allow it to handle more variety, provide more information on each item and better support third-party sellers.

Walmart and its rivals benefit from online marketplaces in multiple ways. For one thing, margins are typically higher: third-party sellers pay the retailer a commission on sales made on its website, while Walmart doesn’t have to assume the costs of warehousing and shipping. Having a marketplace also bolsters Walmart.com as more of a one-stop shop for online customers. What’s more, eMarketer has forecast that total e-commerce sales will reach $684 billion in 2020, or double what they were last year.

The marketplace push comes at a time when growth in Walmart’s $13 billion e-commerce business is slowing and the company is under pressure from investors to speed it back up again. In the first fiscal quarter of this year, online sales rose 7%. But it was Walmart’s fifth straight such period of decelerating increases, and well below the industry-wide rate of 15.1% in the first quarter, let alone Amazon’s 20-plus percent gains, which Walmart was matching until recently. Vastly expanding the marketplace is a key tool for re-igniting that growth, company executives say.

“It’s important that customers, when they come to walmart.com or use our app, find what they’re looking for, so we need to have a broader assortment,” Walmart CEO Doug McMillon told reporters at a briefing in Rogers, Ark., last month. McMillon said at Walmart’s annual shareholder meeting that the company had been waiting to “aggressively market” the site until all the tech building blocks were in place.

In the meantime, the company has been making progress. ChannelAdvisor, which provides tech to marketplace operators including Walmart, estimates Walmart is now #3 among marketplaces, but growing more quickly than Amazon or eBay, albeit from a much smaller base.

While Walmart doesn’t disclose how many third-party sellers operate on its marketplace right now, it is estimated to be in the hundreds. The retailer says it added 100 new sellers in May and 150 in June and expects to add hundreds more by the holiday season, in a marked acceleration. (The Kors bag is being offered by a company that buys overstock lots and resells them online.)

In 2011, Walmart hired a former longtime eBay executive, Jeremy King, to bring the retailer up to speed. His first year was spent effectively rebooting Walmart’s tech, much of which was the same the company was using in 1999. King, whose title is chief technology officer of Walmart Global eCommerce, had to rebuild the marketplace’s architecture and framework. (That was part of a major redevelopment of its e-commerce platform, begun five years ago and called Pangea.)

“The ramp-up has been shocking,” King told Fortune in a recent interview in his office at Walmart.com’s offices in Sunnyvale, Calif. The tech supporting the marketplace had to be updated, he explained, to optimize pricing, classification (to be sure a bike helmet is not categorized as a hockey helmet, for example), and payment to the vendor, not to mention loading data about a seller’s items into 350 fields of information on the Walmart site.

Though King wouldn’t say whether Walmart had concrete plans to eventually make marketplace items available for services like in-store pickup of online orders, as it does for its own assortment, it’s clear Walmart’s 4,000-some stores could give the company a big advantage over its main marketplace rivals, Amazon.com (AMZN) and eBay. (EBAY).

Rivals hold big leads

For all of Walmart’s heft, it’s not a slam dunk that it can start to eat into those companies’ enormous market leads.

“I just don’t know why it’s taken this long” to overhaul the marketplace initiative, says Sucharita Mulpura, an analyst with Forrester Research. At the same time, she says, there’s little downside for Walmart. “It’s very lucrative from a margin standpoint.” She and other experts say that Walmart has absolutely no need to match Amazon’s assortment size (much of which is made up of so-called long-tail items, or items in extremely limited supply like out-of-print books), but that its current 10 million was still well below optimal. Walmart’s CEO for global e-commerce, Neil Ashe, admitted in June that the company doesn’t yet know what the “saturation point” will be.

Running a marketplace is no guarantee of success for a brick-and-mortar retailer. Best Buy (BBY) this year closed down its marketplace business after five years. Experts said that it made little sense for the electronics retailer to get involved in selling a massive assortment of merchandise beyond its own category. Meanwhile, Target (TGT) has never bothered setting one up as it focused on building up its main e-commerce business.

Still, with Walmart struggling to keep pace with Amazon, let alone bridge the gap with a rival whose online sales in the U.S. were six times greater last year, it’s easy to see the benefit of the marketplace.

Indeed, according to a blog posted in May by ChannelAdvisor, some 48% of the value of merchandise sold on Amazon.com came from third-party sellers in the first quarter, a new high. Unit growth in its marketplace was 36%.

It’s clear that Walmart would stand to lose a lot more if it remained inert.

“If you’re a general merchandise retailer, you don’t want someone coming to your site for a product and not finding it because you may never see that consumer again,” said ChannelAdvisor CEO David Spitz.