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Facebook is getting rid of its physical Gifts offering.

This makes us very sad. We were excited when the product first launched as a mobile app (and startup) Karma. We were even more excited when Facebook acquired Karma and relaunched it as Gifts.

And we continued to remain hopeful that Gifts would become a big part of Facebook revenue.

But now, as competitors like Fab start to blow up around the web, Facebook is backing away from physical purchases and the larger world of ecommerce to focus on digital offerings and gift cards.

From an e-mail sent to us by a Facebook spokesperson:

Today we’re beginning to roll out a new design for Facebook Gifts focused on gift cards. Since launching Gifts in December last year, roughly 80 percent of gifts have been gift cards. So we’re now adding more digital codes and making the Facebook Card redeemable at more merchants. As a part of this shift in focus to Facebook Card and digital codes, we’re also phasing out physical gifts.

We understand the logic of ditching what’s not working to focus on what’s definitely working, but still. We liked the personal touch of sending someone a bottle of champagne or a flower-growing kit. Sending a generic, Facebook-themed gift card seems practically robotic by comparison.

Off with the old, on with the new. Facebook Cards have been around since the beginning of this year. These plastic gift cards are almost like a Visa or AmEx gift card, except that they only work at certain retailers. They are reloadable, as well, and are backed by Discover.

We’ll see what merchants come next — and if Facebook can ever pull off a vendor-neutral gift card offering.

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