Craiglist's newest competition in the online classified space: Wal-Mart

Although some may question how this latest move fits into the strategy of the retailer, the retailer has launched a test of a free classified ads service.

Powered by Oodle.com, retailer Wal-Mart last week launched with very little fanfare a "pilot test" of a free online classified advertising service for essentially all product categories. It carries about 30 million listings, is essentially a co-branded version of Oodle's service, and could pose some very sudden competition for Craigslist.

Oodle's classified site launched in 2005 and was founded by former Excite and eBay executives. It says that it averages about four million unique visitors per month, and powers similar services for Lycos, Cox Interactive, and The Washington Post.

Searching for an item on the site is fairly simple. Users enter what they are looking for in one text box on the front page, and then enter a location. From there a results page would be returned, which includes the most nearby listings.

As a guide, the results page also lists a graph showing average prices, and the number of items in a particular price band.

Wal-Mart would not disclose financial terms of the deal, nor would it specify how long the pilot will last. Representatives of the retailer have not returned our requests for comment since yesterday.

The move could be explained by its other recent deals concerning WalMart.com. Yahoo said Wednesday that it would serve ads on the site, and by adding traffic drivers such as free online ads, the retailer may be able to maximize impressions.

No doubt, the big winner here will be Oodle. With the Wal-Mart brand reaching some 130 million consumers per week according to company statistics, no doubt with the right marketing, Oodle could tap into this vast potential user base.