The company signed up 400 manufacturers and 25,000 retailers but wasn't getting much revenue from the 5 percent transaction fee it charged vendors. No one wants to touch them. ForRetail had to show potential investors it wasn't completely dependent on transaction fees. The company hit on the idea of repackaging its e-commerce applications that could handle and track transactions so it could rent them to vendors that wanted to sell through their own Web site. ForRetail's first customer, Inkadinkado, a decorative-stamp manufacturer based in Woburn, Mass., will be up and running by the end of the month.
Revenue is what the company needs right now.
It will try to sign up several more giftware vendors, demonstrate that the business model is viable, then go back to venture capitalists by the end of September. At least one company is completely dropping its exchange in favor of renting applications. AviationX of Arlington, Va., planned to build an online marketplace for the aviation industry. In July, it revealed that it's focusing solely on providing applications for buying and tracking spare airplane parts for regional airlines that can't afford to build their own e-procurement systems. Like Burgess of ForRetail, AviationX's Chairman and CEO Henrik Schr der found venture capitalists in no mood to back a marketplace.