Walmart and Amazon are building a bigger and better version of Costco, a rival to Costco that is expected to dominate the market in the years to come.
Walmart and Costco have long been allies, having worked together on a range of items including grocery and other supplies.
But Walmart has made significant moves toward building out its grocery business and Amazon has been developing its own products and services.
The companies will meet in California this week to discuss the future of Costco.
The two companies are investing $5 billion in their businesses, including $1.6 billion in the first quarter.
Walmart says it is targeting 10,000 stores in the U.S. in the next three years, including its biggest in Florida, where it has announced plans to open stores in 2017.
Amazon, meanwhile, has said it will open about 5,000 new stores this year.
The Costco deal will mark Walmart’s first foray into a supermarket, which has become increasingly important in recent years as people increasingly seek fresh produce and other groceries.
Costco was founded in 1869 in San Francisco, and it has grown to become one of the world’s largest grocery retailers.
Walmart’s purchase of the chain came after a long-running competition between Costco and Sam’s Club, a discount retailer that offers online grocery delivery.
The Walmart deal is expected have a much bigger impact on Costco because of the company’s $20 billion in annual revenue.
Walmart has been trying to lure shoppers away from Costco in recent months by cutting prices and offering better value.
The company recently began offering a grocery store-like package for about $35 that includes a basket of fresh fruits and vegetables, plus packaged goods.
Costco says it has already doubled its number of grocery stores in recent decades and now has more than 1,400 in 36 states.
It plans to add another 300 stores in 2019.
Walmart bought the popular Costco Wholesale Club in 2009 for $2.6 million and plans to spend about $9 billion over the next decade to open about 800 stores, including about 1,000 in California.
The move is expected in coming weeks.
Walmart will offer its own version of Amazon’s grocery service as well as a range-of-items delivery service.
Amazon has become a big competitor to Costco in the last few years, as it has developed its own range of products, including fresh produce.
Walmart plans to start offering Amazon’s Prime Now, which lets customers buy a variety of goods and services, in stores and online through a subscription model.
Amazon is also expanding its grocery offerings.
Walmart announced last week that it will offer a grocery delivery service in stores in Alabama and Louisiana, where Walmart already offers deliveries, and will launch it in the coming months.
Amazon plans to expand its grocery delivery services to all 50 states, as well.
Amazon’s acquisition of the grocery store chain could make it the largest grocery retailer in the country, surpassing Walmart and becoming the third-largest grocery chain behind Costco and Kroger.
The grocery store giant will take a bigger share of the market from Costco and will likely be the second-largest by 2018, after Costco, according to a report by Gartner.
The report said Walmart will take up to 25 percent of the entire grocery industry, while Costco will take about 20 percent of all grocery retailing.
The merger is also likely to spark more consolidation in the grocery industry as grocery chains seek to diversify their offerings and become more profitable.
Walmart is also planning to buy grocery delivery startup Osteria, which provides services to grocery retailers and other food delivery services.
Walmart already operates two delivery companies, Osteriades and DoorDash, and Amazon’s delivery services are also in the works.
Walmart recently unveiled a new grocery delivery app called FreshDirect that could offer delivery for groceries at a fraction of the cost of traditional grocery delivery methods.
Walmart hopes the app will help drive up prices and reduce costs for customers.