June 29, 2001, 12:00 AM

OrderTrust scrambles to recover, but it’s too late

OrderTrust, a highly regarded order management and fulfillment company, surprises the industry with a shutdown.

As if holding on in this tough time for dot-com-related businesses isn’t already hard enough. Last month, Lowell, Mass.-based OrderTrust Inc., a leading provider of marketing and order management services to such high profile retailers as 1-800-Flowers.com and Skymall Inc., became the victim of internal problems. OrderTrust shut down because it could not recover from, in its words, “unreported liabilities and inaccuracies in financial information that resulted in a negative impact on cash of more than $10 million.”


OrderTrust’s demise took the e-retailing industry by surprise. “It is a shame that something happened internally because they had a good product,” says Geri Spieler, research director at Gartner Group Inc. in San Jose, Calif. “They were viable and they were solid.” Spieler had listed the company in January as a visionary, with $100 million in funding and revenue of $15 million.


While details are scant, it appears the problems came from within. Thomas J. “Tim” Litle, who founded the company in 1995 and served as chairman for the last three years, returned to an active position as CEO in January “at the urging of key members of the management team,” the company said. By that time, he says, the company was facing major challenges with its keystone service, Product Market Place, which allowed retailers to connect to OrderTrust’s network of suppliers via a browser. After losses associated with the service proved insurmountable, it discontinued it. Litle, a minority investor in the private company, says he was unaware of the state of the company until he took over as CEO.


Litle says the company had made progress this year in its marketing, operation and software development. “As the facts became known to us over the last few months we sought every possible remedy, but we could not resolve enough of those liabilities to attract investment and to continue doing business,” Litle said in a statement. Part of that remedy was laying off some of the 200 employees when he came aboard in January. When the company shut down, there were about 70 left.


When OrderTrust closed, 1-800-Flowers.com switched to Paymentech. Other clients include SkyMall, Sperry & Hutchinson Co. Inc.’s S&H Greenpoints.com, PublishersClearingHouse (pch.com), Transmedia Network Inc.’s idine, and Blockbuster Inc. Litle says there has been interest by other vendors and clients in acquiring the OrderTrust technology, which analysts say is high quality and should fetch some decent money for the company.

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