Long Version:

There is a company which collects manufacturers product information of grocery products. So they have images, nutritional info, ingredients of around 85,000 products of food and housing supplies from major manufacturers. There are other companies which collect similar info but I am just not aware of them yet. I approached the company and they agreed to provide me a daily xml feed of their product list for a set up fee and monthly charge.

With the data in hand, I started skimming major websites/businesses which used this information. 2 types of business models stood out the most. One was sites using the nutritional info and ingredients list to categorize products by healthy choices, forming a community which discussed healthy eatings and recipes. Second was by grocery chains such as safeway, hyvee, amazon [fresh or the new spinoff] etc. They used this information in their ecommerce application [though there is a stark difference in how some of them fundamentally operate. Such as peapod is a site where one can get groceries delivered but peapod doesnt own any stores and they work with local stores, where as FreshDirect is a webvan style grocery delivery done right]. Either way, all big grocery chains had online delivery section where one can browse products and promos, interact such as create shopping lists, place orders etc.

I am from midwest. Unlike most east/west coast states, midwest states are spread out. In some cases people usually travel to nearby towns to do their shopping, such as Homedepot, Walmart, Target, Bestbuy. There is also a healthy ecosystem of independent grocery distributors and stores which thrive. Distributor usually also has their own private label produts which are knock offs of the original with higher margins and stores are independently owned and are sucessfull in serving a decent size community. They usually have 10-30 employees with no IT department per se. Picture an IT guy who usually maintains the hardware and back end software stuff including updating retails. So his job is already full. And so no way they can set up an eCommerce site and maintain it.

My idea was to build a service surrounding B2B Ecommerce application aimed at independently owned [mom-and-pop] grocery stores. Of the 85,000 products info I have, my estimate is that I will match atleast 50% of their products and the remaining will be either manufacturers my source doesnt carry or private labels. I will set them up and maintain their site with actual product listings on their behalf with latest retails, just like their big chain counterparts and they pay me a modest monthly fee for the service. And as we know about more sources of info we will add more products. There are hundreds of grocery stores which fit this profile.

At this point I commited the cardinal sin of investing time and energy and money into worrying about the right framework for the job and programmer, instead of right sales person to work with. I wanted to have concrete answers on how we will build it so I started researching into open source frameworks which I could use and I picked a Java based web erp application which fit the requirements neatly. It let me set up web based ecommerce applications with full customization capabilities for each site all from a central backend. I then approached a freelancer, hired him to set up the company site, a demo site, work in the backend to start customizing the business logic etc. Once the work started and it seemed like it was dooable,I hopped on hoovers.com and researched all stores with revenue greater than million dollars which are independently owned and obtained a list of 100 stores in my state. I then approached a customer who seemed interested, but was extremely skeptical. Since I had no prior experience with any other customer and this is my first attempt at a startup, I offered to do this for free and if he likes the product he could pay. I was so desperate that I agreed to do this with out even signing a contract which he verbally agreed.

I then signed the contract with our source and we started working on importing the data into our system. Fast forward to today, the customer I talked to is not that interested anymore. He is concerned that we will not be putting his private label products online which are his major profit makers. But since I dont have access to that info nor do I know of anyone, I asked him if he could recommend me to someone who can obtain this data. That is where I am. He is putting me off saying that he is working with his distributor to obtain the info I need while we are working aimlessly. I have already shared my product list with him but he hasnt given me his. I have offered to help him extract the info if needed to analyze his data but he is just too uncomfortable sharing his list I guess. I read some where that beaware of your first customer and he is the direct incarnation of the worst first customer ever.

Finally, there is still a 1-1.5 months work left and I would need to another 3-4K of programming and server expenses to set at least one customer/store up and _hopefully_ be ramen profitable. I dont feel like approaching other potential customers since I dont know if I can get it done. I am completely broke because of unforseen expenses in Jan. I currently am unemployed and have been for more than 6 months. Because of personal reasons I was stuck in the same small town with no real job openings. Friends and family support long dried up. Personal credit has always been bad. I dont want to go the route of shopwell.com or zeer.com where a community is built around product information because of uncertainity reasons. Ecommerce service seemed a viable business model but I would need a finished product before I can sell to customers.

I have no partners and bootstrapped my way so far. I have a reasonable friend who listened to my story and asked me to drop the project and accept loses. He offered me a place in TN and promised me that he will try his best to find me a decent job to get back on life. That would mean that I would have to leave everything I worked and invested and start afresh since I will be back in corporate job.

So,I am looking for answers on, - What would you have done to monetize such data? - How would you have done different if you were me? - What would you do if were me? [based on the info and financial situation I am in]

Thanks a lot for reading guys.