eConnections failure will test rivals

The stunning demise of eConnections has sent shock waves through the broader supply chain services market, where more casualties may be imminent.

The same factors forcing eConnections to throw in the towel-the slumping electronics industry and slower-than-expected adoption of its services by high-tech users-are likely to hit other providers, analysts said.

Start-up companies in this space, once the darlings of the venture capital community, are under pressure to meet return on investment expectations and attract a better mix of mid- and top-tier players as quickly as possible, even in tough financial times.

"We had traction and important relationships were being forged, but there were bigger questions to ask: What is the health of the industry, how will the industry buy parts, and where will it buy parts from?" said eConnections chairman and chief executive Rob Rodin.

Those that have a hard time answering those questions will go out of business or be merged with stronger players, analysts said.

News source: EBN - eConnections failure will test rivals

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