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Byline: Elise Ackerman
Aug. 21--Just six months ago an online marketplace seemed like a foolproof business proposition. Not any more.
By processing transactions over the Internet, so-called e-marketplaces for buying and selling business supplies and services were supposed to save traditional companies billions of dollars while handsomely rewarding shareholders with a percentage of each transaction.
Embracing the idea, investors granted fairy-tale market valuations to fledgling enterprises with meager revenues. After going public in July 1999, Chemdex, an online marketplace for the life sciences industry, had revenues of less than $200,000 and a market value hovering around $1 billion. Three months later the company's value soared to more than $3 billion.
But the share prices of business-oriented Internet companies began to plummet during the spring, along with the overall decline in technology stocks. By July, the reality was irrefutable: Online transactions were not spreading like wildfire through the business world.
Today, online marketplaces are re-examining and reshaping the fundamentals of their businesses. Pioneers like Chemdex have started peddling everything from consulting services to …