In early August, Amazon announced its plan to take over the shipping business in the United States, with the goal of making it a more efficient way to move products around the country.
The company said it would expand its shipping footprint to about 100,000 warehouse locations and create a new national office that would provide its customers with better service and faster shipping.
Amazon announced that it would start shipping directly from warehouses in the first quarter of 2021, but did not specify how many warehouses it would build.
“This is an industry that’s growing faster than most industries, but it’s also one that has some of the lowest productivity,” Amazon CEO Jeff Bezos told the Wall Street Journal.
“Our goal is to do something different.”
But the plan is a bit like taking over the entire shipping industry and making it run like a business.
As part of Amazon’s plan to compete with shipping giants like UPS, FedEx and FedEx Express, it will build new warehouses and create its own logistics service, Amazon Container Terminal.
Amazon plans to charge a 10% service fee on the items it delivers and then charge a different fee to the consumer for each shipping option.
The cost of shipping would be passed on to customers through a 3% sales tax.
Amazon will also provide incentives to shoppers for buying the same goods online, rather than through a physical store.
Amazon Container Terminals will be open to customers from October through the end of 2021.
For a complete look at how Amazon plans on competing with shipping companies like FedEx, UPS and FedEx, see the company’s first-quarter earnings call on August 14.
Amazon currently ships around 100,0000 packages a day, and Amazon ContainerTerminals will take that number to around 1 million packages per day.
Amazon’s plans to consolidate the shipping industry into one centralized warehouse are also being met with some resistance.
“The big concern is Amazon Container is a warehouse, and so the only way to be competitive is to be all-in on the delivery model,” Jefferies analyst Jim O’Neill told Fortune.
“If they want to be the big-ticket seller, they can’t compete with the big retailers.
If they want the big seller, it’s not a viable option.”
O’Donnell noted that Amazon’s new warehouse plan also means that Amazon could be a “big seller” if its customers didn’t have to pay shipping taxes on packages they shipped.
“They have to make a profit on their packages, so it’s a win-win for them,” he said.
The competition with UPS and Amazon is also an ongoing one.
The shipping industry has been shrinking for a while, with UPS losing nearly $20 billion in sales over the past year.
Amazon, on the other hand, has seen a rapid increase in its market share over the last few years, with Amazon Container Services growing from 1% to 4% over the same time period.
And while Amazon has been growing faster in the last year, its market cap has not yet reached the $100 billion mark.
In 2021, Amazon will be shipping a total of around 3 million packages a week, and it plans to open a new warehouse in 2021 in Atlanta.