OpenSky CEO John Caplan
When a consumer visits the shopping-focused social network OpenSky.com, she’s looking to browse or buy online, says John Caplan, founder and CEO of the social network’s parent company The OpenSky Project Inc. That’s different from Facebook, Twitter and even Pinterest, where consumers have other objectives, such as catching up with old friends or finding wedding-planning inspirations, he says.
That difference explains why the conversion rate for consumers who view products on OpenSky is about 10.5%, a rate higher than all but 10 retailers in Internet Retailer’s 2013 Top 500 Guide.
The social network, which has nearly 600,000 monthly active users, lets retailers create an account on the site, post products and sell to the site’s users directly on the platform. When a retailer posts to OpenSky, he can click a button to also share the post on Facebook andTwitter. About 3,300 merchants actively post to OpenSky.
Consumers on the platform can follow merchants, as well as other shoppers. When a user logs in to the site she sees a feed that shows updates from those she follows. When a shopper clicks on a brand’s post, she is taken to a product page where she can complete her purchase with a click.
OpenSky takes a 20% commission on each sale made on its platform, except when the retailer recruited the shopper to join the platform, in which case it doesn’t pay a commission on any of that consumer’s purchases. That means that if a retailer, say Jan’s Jeans, posted a note on Facebook encouraging shoppers to join OpenSky and a shopper named Dean clicks on that post and joins the social network, Jan’s doesn’t pay a commission whenever Dean buys from the retailer on OpenSky.
“That’s why we’re always trying to get people to join OpenSky,” says Angela Parker-Kennedy, designer and owner of Olive Yew Jewelry, which sells on OpenSky, Etsy and about nine other online marketplaces, as well as its own e-commerce site OliveYew.com.
Olive Yew has more than 14,600 followers on OpenSky, more than double its roughly 6,500 Facebook fans.
To drive sales, Olive Yew posts on OpenSky several times a day to highlight its products, says Parker-Kennedy.
The retailer regularly cycles its products on and off the platform; it typically has about 50 of its 189 pieces on the site at any one time.
“That enables us to switch out the products to keep things interesting,” she says.
OpenSky, she says, accounts for about 15% of the retailer’s orders. However, around the holidays that percentage can surge as high as 50% because it heavily promotes items on OpenSky, while also sharing those posts on Facebook and Twitter.
Olive Yew’s sales show the platform works, says OpenSky’s Caplan.
“The Holy Grail of social marketing has been getting the conversion,” says Caplan, who will be talking about retailing’s evolution in a keynote presentation next week at Shop.org’s Annual Summit in Chicago. “That’s what we’re seeking to address.”
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Our job at OpenSky is to help the world’s creative brands grow. In recent weeks we have made a significant step forward.
We’ve released the the updated Posting tool. Here’s why and how it works:
Why: The Posting tool makes social selling simple and fast.
How: Merchants make Posts from the top of their feeds or from their dashboards. A Post is a way to merchandise your goods to all of your OpenSky, Facebook & Twitter followers. You can create a Post in less than 60 Seconds and in 4 simple steps:
Data: Merchants selling on average of 55 items in the last 30 days made 2 Posts a day and shared them on Twitter, Facebook & OpenSky. Merchants with zero social sales, made zero Posts.
John Caplan is Founder and CEO of OpenSky.
Have you answered our Merchant Questionnaire? It helps our PR department find great stories to pitch to press outlets. Olive Yew! did and we were able to secure placement for them in the Charlotte Observer.
If you haven’t, do so today. A press opportunity could be right around the corner.
Designer Angela Parker-Kennedy started Charlotte-based Olive Yew in 2011 after many years of working in corporate America in graphic design. She decided she couldn’t sit in a cube anymore and then took a metal smithing class and the rest is history.
All of her jewelry is timeless and affordable with Olive Yew’s capital letter necklaces as a signature of the line.
Angela attributes one of the greatest reasons for her success to selling on OpenSky—a great way for small merchants like Olive Yew to connect and interact with customers using social media as a shopping tool.
Once Angela set up her storefront on OpenSky, she has been able to interact with all of her customers from Charlotte and around the country to offer them new exclusive designs and special discounts. She has now grown to 7 employees and has even moved to her very own design studio.
To help celebrate Olive Yew’s success, two winners will each receive a silver mini initial pendant in initial of their choice. SRP $40 each.
Did you know that merchants who post frequently in their OpenSky Feeds and push those posts to Facebook and Twitter sell TEN TIMES more than merchants that don’t post? The numbers are in and they’re conclusive.
Post to your followers today. Offer a limited time promotion and push it to Facebook and Twitter and you might just get featured in our “After Hours” email.
Focus on engagement and relationship building, and the sales will come.
The good news is that small businesses often have an edge over bigger brands when selling online–if they know how to use their size to their advantage.
Even better, the key tactics for growing a business online actually go against the conventional wisdom on the subject.
Here some do’s and don’ts for navigating the world of selling online:
Don’t try to build your own online shopping destination and expect it to drive sales growth.
Online storefront companies make incredible technology, but once you build your store it’s hard to actually create a growing commerce business unless you have a big budget to buy advertising.
While you may believe that having your own website will attract lots of new shoppers, website development and maintenance is expensive and time consuming. The hard truth: Consumers aren’t searching for you. If they do search “bracelets” or “bbq sauce” the big companies bid up the keywords, making it near impossible to appear on the first page of search results. Bottom line: page 2, 3, or 400 of search results never built a brand.
Don’t expect your unique products to sell on a large online marketplace.
While big online marketplaces such as Amazon or eBay attract millions of shoppers, unless customers are searching specifically for your brand, they will never see or discover your products. (And if they do, you’ll be in a sea of other similar goods.)
The only way to drive volume in the big marketplaces is to be super cheap. (That means no margin.) Bottom line: List your goods for the occasional sale, but don’t count on much volume, margin, or brand building.
Do actively use Facebook, Twitter, Instagram, and OpenSky to promote your brand.
These are powerful channels for engagement and for creating direct-to-consumer connections. On OpenSky, the more followers a merchant has, the more goods it sells.
But to make the social networks work for you, you need to post. If you don’t engage, you don’t sell. Merchants use OpenSky to create posts and share them across all of their social networks. It saves time and coordinates their marketing. And they see that as a result, they get ten times the sales of merchants who do not post. Bottom line: Invest in relationships on social platforms.
Do create eye-catching content and do it frequently.
No one remembers the bland brand. Bottom line: Let your voice out.
Create tips, recipes, or behind-the-scenes snippets.
If your products are naturally sourced, why not share photos from the beautiful hike that provided your inspiration for it? Sharing relevant and relatable content will keep your customers coming back. Bottom line: Teach and engage.
Do use your size to your advantage.
Build personal relationships with your followers on social platforms. Answer questions, engage, and interact by sharing product news, relevant content, and personal reminders about new items you think your followers will enjoy. Remember that what makes your small business special is your customers’ opportunity to feel a personal connection with you, the entrepreneur, and your passion (your product). Bottom line: Build your brand by connecting with people in personal, relevant ways.
Selling online can build your brand and business. But don’t go after sales first. Focus on engagement and relationship building, and the sales will come.
JOHN CAPLAN is the founder and CEO of OpenSky, a social network for shopping. OpenSky launched in April 2011 and now has more than 2.5 million members. Before OpenSky, Caplan was the CEO of Ford Models and president of the About Network, which sold to Primedia in 2001 for more than $500 million.
Check out this article published today on Forbes.com. Our Founder and CEO, John Caplan, is interviewed about how OpenSky is pioneering social commerce.
It’s been about five months since OpenSky launched the latest version of itself, the company’s third business model in four years, but CEO John Caplan isn’t bashful about what he’s achieved. “OpenSky has solved the Internet for small business,” he declares while riffing through a PowerPoint presentation at the company’s Chelsea, Manhattan headquarters.
With a veteran’s ease with pitches and talking points, he rattles off the numbers: 2.8 million registered members, 7,000 merchants selling 32,000 products. Each month ten percent of the site’s visitors make a purchase, he boasts, a conversion rate that dwarfs the industry average of three percent. “So I’ve basically kicked the s—t out of traditional e-commerce,” he says, lowering his voice on the expletive.
Maybe he has. But in startup terms, OpenSky has had a long, rocky history. Before starting the company Caplan, a 43 year-old Manhattan native, enjoyed a long streak of success, first as president of About.com during its late 90s heyday then as the CEO of Ford Models beginning in 2002. When he left Ford in 2009 the company raked in $130 million in annual sales, up from $30 million five years earlier.
He started OpenSky that year as a sort of beefed up affiliate network of independent bloggers. The company enlisted popular niche bloggers, gave them a digital shopping cart for in-page purchases and encouraged them to sell on behalf of cash-starved small businesses. The goal was to give small businesses a lucrative new sales channel while granting a nice chunk of those sales to the bloggers. The company raised $11 million from Highland Capital Partners, Canaan Partners and others through 2010, but after little more than a year the business stalled. OpenSky’s 5,000 bloggers grew to reach an audience of just 100,000 unique visitors according to TechCrunch.
In the spring of 2011, the company switched gears. Caplan recruited a cast of celebrities, including Martha Stewart, Serena Williams and chef Bobby Flay, to recommend products via a Twitter-like feed within the OpenSky site. The model showed potential, and even sales. Caplan raised another $30 million from his investors that October. FORBES, meanwhile, listed OpenSky as one of its Most Promising Companies last year, citing revenues of $18 million in 2012, up from $4 million the previous year. So we were a little confused, and worried, when the company announced yet another pivot.
But Caplan says that even as the celebrity-based model grew, he spotted a bigger opportunity. In November he listened to OpenSky’s in-house buyers complain about how many pitches they received from small businesses clamoring to get on the site. Since OpenSky managed inventory itself, the company could only handle a fraction of the sellers. “So we said we’re not going to build a store,” Caplan remembers. “We’re going to take our technology, simplify it and then get the hell out of the way.”
What does that mean? It means that OpenSky now allows any small business to create an account on the site, list its products and start selling to a baked-in network of buyers. Companies attract followers like they would on Twitter and customers view a feed of updates from the businesses and members that they follow. Click on an update, and you’ll get taken to a product page where just one more click leads to a purchase.
OpenSky takes a 20% commission on each sale, but takes nothing if the buyer was recruited to sign up by the business itself. So if, say, a customer of Style Girl signs up for OpenSky via Stye Girl’s Twitter account, OpenSky takes nothing when that customer buys a Style Girl product. Her customer = her sale. When customers recruited by one business buy from another–say that Style Girl customer buys some Knork flatware–the recruiting company gets a 10% cut. The system is designed to incentivize businesses to bring as many customers on to the site as they can.
Gigi Pascual, the founder and owner of Buttermilk, a Los Angeles-based food truck and vendor of red velvet pancake mix, is a fan. Her 5,000 OpenSky followers, many of whom she brought over from the company’s Facebook and Twitter accounts, buy an average of 50 cans of her $13 pancake mix each week. After experimenting with Etsy, an online marketplace for small businesses, and Shopify, a service for creating e-commerce sites, she now uses OpenSky exclusively for online sales. “With Etsy I couldn’t even find my product,” she says. “OpenSky is more organized and a better marketplace in general.”
Caplan points out other advantages. Existing options, like Shopify, require small businesses to become experts at online marketing, web design, SEO and other skills with which they’d rather not bother. Places like Amazon and Etsy may provide helpful sales channels, but sellers have trouble establishing customer loyalty and relationships. Social media, on the other hand, is great for building brand loyalty but less effective in generating actual sales. OpenSky, he says, solves each of these issues. The company, for instance, claims that one of their followers is 27 times more valuable than a Facebook follower.
If this is the case, and Caplan really has solved these issues, then OpenSky could prove to be a very important business. Creating a social network based around commerce is one of the holy grails of the consumer web industry. Many point to Pinterest’s potential in this regard, and its lofty $2.5 billion valuation is an indication of the value investors place in this potential. Facebook, Twitter and Instagram don’t sell stuff, they sell ads that hopefully, eventually, lead people to buy stuff. If a social network could dispose of this step and simply figure out a way to get people to buy things right on the site, the theory goes, that would be a very valuable property.
Yet Pinterest still hasn’t figured out how to turn itself into an e-commerce machine. Other companies, most notably Fancy, seem to be pushing in a similar direction as OpenSky. Fancy recently raised $53 million at a rumored $600 valuation. While the numbers that OpenSky provided look promising, they haven’t disclosed their revenues beyond asserting that there are several sellers doing more than $100,000 a year and that marketplace sales grow 35% each month. Caplan says that 100 merchants join each day, along with 1,000 members. That’s respectable, but hardly viral. And Caplan says he doesn’t intend to spend on marketing anytime soon.
Caplan calls OpenSky a “lean team” at 47 employees, nearly all of them focused on the website and technology. In total, the company has raised $49 million, which leaves one wondering: are his investors nervous?
“It doesn’t make me nervous at all,” counters Bob Davis, an OpenSky director and partner at Highland Capital Partners. “The concept of a business adapting and molding to the marketplace is what great businesses do.”