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So Many Words, So Little Dough: How OpenSky Is Going to Change Web Math

Startup OpenSky may have cracked code for Web publishers and small e-tailers, delivering profits to both while helping consumers with a pain-free shopping experience.

A fundamental truth of the Web
is that it is easy to publish but hard to monetize. Literally millions
of publishers post content on a daily basis yet few reap enough cash to
justify the investment in time and energy. Even highly popular bloggers
with hundreds of thousands of loyal readers struggle to make the math
work. Small manufacturers that set up their own online stores have
little hope of drawing large enough audiences to make ends meet. And
consumers for the most part struggle to know what to buy and from whom –
especially when it comes to specialty goods.

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OpenSky

Enter OpenSky, which bounded out of beta last week vowing
to change all this. I was aware of OpenSky through evangelist Ted
Rubin
but didn’t really get the concept until I sat down with the
principals and one of their early beta testers for a couple of hours at
their opening soiree. I now get it. And while OpenSky benefits
publishers, their readers, and small-scale manufacturers with a robust
Web platform, I think the idea boils down to this: OpenSky is a
scalable micro-commerce utility that enables publishers of all sizes to
actually make money on the Web.

That said, the best way to
understand OpenSky is to look at it from the perspective of each of the
constituents; publishers, manufacturers, and consumers. In the process,
you should come to understand why I think OpenSky is indeed a game
changer, and will bring profits to publishers, markets to manufacturers
and peace of mind to consumers faster than you can say, ka-ching.

Sharing,
Not Schilling: The Bloggers Perspective

Marta Wohrle, a veteran
of the publishing industry, started her blog, TruthInAging.com, in 2008.
According the site, “Truth In Aging writes honest, thorough and, we
hope, fun reviews of anti-aging cosmetic, makeup and hair products.”
Reaching out to friends and family, Marta was able to build a nice
following that doubled in 2010 thanks to a strong SEO program. But
Marta still had a problem. She noted, “Even with Google AdSense
delivering an average $7-8cpm and my Amazon affiliate program delivering
7% on referred sales, I wasn’t making enough to justify my time.”

With
a sizable mailing list and over 45,000 visitors a month (according to
Compete.com), Marta was an early beta tester of OpenSky, having already
been searching for a way to increase her Web revenue. Noted Marta, “At
first I was a little concerned that my readers might be offended if I
started selling products I reviewed right from my site.” Creating a
small group of “VIP customers” to test with, Marta found that only 2 out
of 400 suggested she might be “going to far” while the others were
overwhelmingly positive. Relieved, Marta pressed forward, excited at
the prospects of gaining half the profit on each product sold, the other
half going to OpenSky.

Marta explained that, “By selling the products I have been
reviewing and recommending directly on my site, I make it easier for my
readers to buy them and at least double my profit margin compared to
Amazon in the process. My readers trust me and I don’t dare break that
trust by recommending anything I don’t believe in,” she added,
identifying one of the lynchpins of OpenSky’s value proposition.
Successful publishers like Marta depend on building and maintaining
trust with their readers–selling inferior products just to make a buck
would jeopardize the whole enterprise.

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Finding New Audiences: The
Boutique Manufacturer

One of the products Marta recommends and sells on her blog is a $27 organic eye cream from a four-year-old husband/wife company called Nurture My Body. Traffic to NurtureMyBody.com according to Compete.com is well below 2,000 per month and more than twenty times less than Marta’s site. For Nurture My Body, any sales they get from Marta’s site is like manna from heaven. It cost them nothing to list their products on ShopOpenSky.com and Marta’s recommendation translates into high sales and low return rates.

Founder of OpenSky, John Caplan, explained that having a low return rate is
another of the lynchpins to his company’s success. Noted Caplan,
“During the beta, about 1% of products sold through OpenSky were
returned which was phenomenal, especially when compared to 19% for
Amazon and 40% for Zappos.” Caplan’s doesn’t necessarily expect their
rates to stay that low with 6% returns built into the plan, but at that
same time, he’s not surprised. Caplan observed, “Bloggers like Marta
have built up extraordinary trust, so her recommendation simply carries
the day.”

A Better Shopping Experience: The Consumer Wins Too

When
one of Marta’s readers sees a product she wants, the buying process
begins with a simple click on a link. This easy
shopping experience is the third lynchpin for OpenSky according to
co-founder Kevin Ambrosini, whose resume includes highly successful
e-retailer, Gilt Groupe. Noted Ambrosini, “The shopping cart sits on
the publisher’s site but we handle all the hard stuff like credit card
verification and order processing.”

Well aware of the importance
of a smooth buying experience, OpenSky also takes care of the customer
service issues related to online ordering. Added Ambrosini, “If
shipping takes too long or our 800# staff can’t resolve issues right
away, the whole thing falls apart, so our goal is to provide the best
customer service anywhere.”

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One of the requirements for suppliers to
put their goods on the OpenSky platform is that they can “drop ship”
products anywhere in the U.S. Ultimately, OpenSky hopes to publish
average shipping times so buyers know what to expect and sellers are
incented to expedite their processes.

Win, Win, Win, or Too Good to
Be True?

Entrepreneurs are inherently optimistic and the team at
OpenSky is no different. Their energy and enthusiasm is infectious and
clearly, I am now a believer. Time will tell if OpenSky indeed can
change the math of Web publishing. One thing is for certain, unlike
Facebook and Twitter, OpenSky knows from the start how its bread will be
buttered, with publishers, manufacturers and consumers all winning.

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About the author

Drew is the founder of Renegade, the NYC-based social media and marketing agency that helps inspired B2B and B2C clients cut through all the nonsense to deliver genuine business growth. A frequent speaker at ad industry events, Drew’s been a featured expert on ABC’s Nightline and CNBC

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