Judy’s Book announced this morning that it has thrown in the towel on efforts to transform itself from a review-driven IYP/social network to a local shopping/lead generation site. The company, which was part of the class of 2005 social nets that included InsiderPages, now part of CitySearch, had raised $10.5 million. Leftover funds will be returned to investors.

Company co-founders Andy Sack and Chris DeVore says they hope to continue developing innovative ventures together, and expressed regret that they weren’t going to continue with Judy’s Book. “If we felt we were wrong, that would be one thing,” says DeVore. “But we were working on how people shop locally. We learned 80 percent of what we know we need. We just didn’t have enough rope” to continue to work on it (i.e. the backing of a major media concern).

DeVore says he remains bullish on local online commerce — perhaps now more than ever. “The major retailers…the WalMarts of the world….are already into fulfillment and inventory,” he says. Truly local players are bound to be next.