Time reporter Dan Fletcher recently tried to use Facebook as his florist, with mixed results.

He chronicled his adventure in a piece titled:
Gift Giving on Facebook Gets Real

This tongue in check portrayal illustrates the challenges that retailers will have as they attempt to move from virtual gift selling to the real deal on Facebook.

Dan attempted to use a Facebook application to purchase and deliver some actual roses to three women on his “gift list”.

In the end, only his mother would take the roses from him, and here is why…

Facebook is not designed to be a convenience store. If retailers are looking for another distribution channel like 7/11, they will fail in this space. Purchasing convenience is not what social networker’s need when they come to Facebook. They are there for something different.

Facebook is a friend and family gathering system with the potential of being a fabulous retailing format. It can be the perfect place for passing out real gifts to people who WANT to stay connected. But the key is not the convenience of the purchase; rather it is the simplification of the gift sharing process. Even then the sharing must be a part of the engaging conversation within the Facebook experience. Retailers who can facilitate the sharing of gifts within these walls will find the gift selling process simplified.

Facebook is more like a party than a convenience store. Retailers who can inject a fun atmosphere of a group activity within the gift giving process will fit the Facebook model perfectly.

Until Dan’s real flowers can join the Facebook party, they will wilt in the delivery box.

My father never took me fishing, even though I grew up in the country. We raised cattle, we had a fully stocked pond, I rode horses and a raised a donkey, but I never considered myself a farmer or a fisherman.

Maybe this is why I have trouble understanding these virtual farm games on Facebook, and the idea that a virtual payment is a sustainable business model.

Yet, people are buying virtual items to build a farm, fill a fish tank or fleece a mob boss in large numbers. While all this pretend work is occurring, there are companies making hay with these new virtual currencies.

Facebook is exploring a way to make more of a cut from the estimated 16 billion dollar virtual goods industry with a “Pay with Facebook” program.

In fact several Facebook executives think that a payment system within the network could make more money than advertising.

While I agree that a payment system structured like the PayPal model would be a great service to Facebook users, I feel that selling real products makes for a better long term opportunity.

But for now, most of the investment money is chasing the virtual farmers and pretend hit men of social gaming. In fact, “the investment activity in the virtual goods sector in 2009 has more than tripled from that of 2008”. As reported in the Social Times blog.

A sustainable payment system will need to be built around buying real things, just like PayPal supports. How long will people stay down on the virtual-farm once they learn a way to buy some real items through their Facebook account?

There are millions of families gathering together to share the details of their life on Facebook every day. The numbers are pointing toward huge generational connections in this space and soon retailers will discover ways to integrate commerce into the social fabric. Eventually we will find ways to share real products with those we love on Facebook, and this will require a convenient payment system.

If Pay with Facebook is structured to facilitate the financial transactions of e-commerce, then this is a business model that I can get behind.

Inside Social Games suggest that the U.S. market for virtual goods will reach $1.6 billion in 2010. That is a nice number, but when you consider that just the “gift segment” of total US retail sales is over $106 billion dollars, Facebook could plow some fertile ground with proven sustainability. And the harvest would yield a bigger return for the investment community.

It is a nice diversion to pretend to fill a fish tank with your laptop, but virtual goods will never replace the value of sharing something real with someone you care about.