Walmart Online to dominate Amazon? Walmart has been trying hard in the online space for ages! What indicates they aren't trying hard? I'm sure they're trying as hard as possible. A major problem for Walmart is engineering talent. Top engineers don't want to work for Walmart. The brand has negative value for an engineer. Innovation and the ability to leap frog will be hindered by this brand problem.
And as far as "pick out items online and have them boxed at the customer service desk". Yes, it does sound reasonable - in fact they've been doing this almost since day one (Site-to-store). It's obvious and it doesn't solve any real problem. I don't want to have to get in my car, deal with traffic, park in a huge parking lot, wade through crowds and Walmart, wait for a disinterested customer service rep to find my online order (let's hope they didn't forget anything), ring me up, then haul everything back to my car, drive home, etc.
I want to click a button for what I want, then open my door that same day and see my items sitting there waiting for me. That is human progress and innovation that Walmart isn't going to be able to match.