Facebook Joins Amazon with Physical Retail Locations

Spotlighting small businesses

Facebook (FB) recently opened pop-up stores inside nine Macy’s (M) store locations across the United States for the holiday season. This marks the first time that Facebook has opened a physical retail outlet.

Facebook says its pop-up stores will showcase products from 100 small businesses and brands using its digital services to grow sales. Tens of millions of small businesses have a presence on Facebook through Facebook Pages profiles. Amazon (AMZN) also has been opening physical stores. The company’s $13.7 billion purchase of Whole Foods gave it around 500 stores. It has continued to open more stores, mostly under its AmazonGo and Amazon 4-star brands.

Facebook Joins Amazon with Physical Retail Locations

Amazon showcasing its hardware products

While Amazon is using its retail outlets to promote its hardware products such as the Echo smart speaker, Facebook makes no mention of using its shops at Macy’s locations to push its recently released Portal video-calling device.

What’s notable about Facebook’s move with physical store outlets is that it seems to follow a trend of its emerging fierce competitor, Amazon. According to eMarketer, Amazon is steadily growing its share of digital ad spending in the United States, threatening the foundations of ad-funded companies Facebook and Google (GOOGL).

Product search begins on marketplaces

In addition to Amazon, other digital services companies that have been opening physical locations include Alibaba (BABA) and JD.com (JD). These Chinese e-commerce companies also compete with Facebook for advertising dollars.

Since Facebook has also expanded into the e-commerce space through its Marketplace service, perhaps running physical stores could help the company gain insights that it could leverage to improve the service.

Recent UPS Pulse studies have shown that an increasing percentage of online shoppers begin their product search on marketplaces rather than on search engines or social networks like Facebook.