Wal-Mart (NYSE: WMT - News) , the largest US retailer, has launched a free classified ads service on its Walmart.com website in an alliance with Oodle.com, a small California start-up that is seeking to challenge the dominance of Craigslist.

The listings on Walmart.com draw on its own users and hundreds of thousands of listings from Oodle's other partners, including The Washington Post and Cox Media, and currently include a horse for sale for $400 in Stewart, Tennessee, a $5,500 Honda (NYSE: HMC - News) motorcycle in Burleson, Texas as well as houses and jobs.

Wal-Mart is the first retailer to attempt to enter territory that was traditionally dominated by local US newspapers, which have been steadily losing ground during the past decade to online competitors.

Craigslist currently has 30.3m unique users monthly, according to ComScore Media Metrix, while Oodle claims 5m. Walmart.com is the second-largest online retail site in the US after Amazon, with 29.3m unique users in April, according to ComScore.

The retailer does not break out its online revenues but they are estimated by some industry observers to be in excess of $2bn annually.

The new service comes as Walmart.com is seeking to increase the revenues generated on its retail website from paying advertisers, which currently include Vonnage, the phone company, and Netflix, the video rental company.

The retailer's online division, based in San Francisco, is recruiting a marketing director for online media, whose job will include developing Walmart.com's "aggressive revenue goals" for its online ads so they "can deliver five times its current revenue levels within three years".

Walmart.com has joined Amazon.com in the past 18 months in making its home page available for other advertisers, a tactic that has also been explored by Home Depot and other US retailers.

Walmart.com says the advertising makes a "substantial" contribution to its profits, without giving details.

Oodle was launched in 2005 by a group of former executives from Excite and Ebay, and is headed by Craig Donato. Apart from Craigslist its rivals include Kijiji, a subsidiary of Ebay.

Ravi Jariwala of Walmart.com said the new service would "provide additional opportunities for our customers to save money and live better" and would "further connect" with the retailer with its customers.

Last year, Walmart.com formed a partnership to operate online customer reviews with Bazaarvoice. It also has a partnership with Triad Digital to provide information and background on a range of topics, such as health and diet.