After dominating the opening exchanges and taking the lead through Wes Thomas' first goal for the club, Parkinson's men were suddenly knocked out of their stride when Colchester equalised later in the half against the run of play through Darren Ambrose.
City's indifferent display sadly continued into the second period, with Colchester deservedly taking the lead just before the hour mark. The impressive George Moncur had already hit the post and then the bar within four minutes before Ambrose netted his second of the night after the Bantams failed to properly clear a corner.
Parkinson's side tried to rally but they unfortunately failed to muster a response in the remaining section of the half to fall to an unexpected defeat - their first in five games.
Speaking after the game, Parkinson said: "I thought for the first 20-25 minutes we were excellent - we did everything we set out to do.
"When we conceded their first goal though, we just stopped.
"It was almost as if we didn't expect them to score just because they are bottom of the league. The really disappointing thing is that we simply didn't play from there on.
"The atmosphere was different this evening but you'd expect that playing at home to a side who are ten points adrift at the bottom of the league - we had to handle the situation better.
"It is the first time for a long time that I can remember where we really lost our way.
"It is difficult to explain this performance because we really did lose our way out there. There were too many indifferent displays and I need some thinking time to digest this game.
"This is a tough business that we are in but we have to make sure it doesn't knock us too much and that we are ready for the weekend (vs Bury).
"We have to take the criticism from tonight (Tuesday) - we know our performance was very poor - and dust ourselves down for Saturday.
"We are hurting after this one and there will be a reaction. We were just so flat tonight.
"I think we expected to be two or three goals up after the way we started the game but we weren't and we needed to handle the situation better."
In an attempt to get City back into the game, Parkinson introduced Billy Clarke and Mark Marshall for Josh Cullen and Thomas respectively on the hour.
Parkinson added: "Wes had come into the game with a sore calf and needed to pass a fitness test this evening.
"He was feeling his groin in the first half and needed it strapping up at half time.
"Josh also took a bit of a knock in the game. He probably could have carried on but we wanted to get that extra width on the pitch."
Away from the game, City are hopeful that the knee injury sustained by Steven Davies at Blackpool at the weekend isn't as bad as they initially thought.
Parkinson said: "It is slightly better news with Steven. We don't think it is as bad as we first feared.
"He doesn't seem to have injured his cruciate knee ligament but we should know more later in the week."