Emerging Platforms Spotlight | Canal

Turning Your DTC Sales Channels Into an Online Marketplace

If there’s one thing I’ve learned from working with consumer brands every day, it’s that the eCommerce space can be a roller coaster. On the one hand, the availability and simplicity of enterprise platforms like Shopify means it has never been easier to stand up your own storefront. On the other hand, it’s becoming increasingly difficult to acquire customers.

The golden age of cheap customer acquisition is over. In the past 18 months, the playbook for digitally native brands has broken down. Paid channels are increasingly saturated, and customer acquisition cost, or CAC, is soaring. In the second quarter of 2021 alone, the average price per ad across Meta’s services (Facebook and Instagram) jumped 47%. To add to the problem, privacy changes in iOS14 that require opt-in for data sharing make it much more difficult to target customers accurately.

The Marketplace Model

One way eCommerce retailers have learned to adapt is through the marketplace model. It makes a lot of sense. Behemoths like Amazon have trained customers to expect a checkout for everything they need, and return on ad spend, or ROAS, is higher when products are promoted closer to the point of sale. Even for smaller brands, adding third-party products can result in higher average order value or AOV, and more repeat purchases for the brand, while suppliers gain access to new, high-intent customers. In an age of supply chain woes, marketplaces also help brands expand their catalog quickly without the operational lift of developing a new product in-house.

Even so, marketplaces can be difficult to execute well. Third-party aggregators like Amazon prioritize their white-labeled products, making it difficult for smaller brands to stand out. Traditional dropshipping can be a labyrinthine of spreadsheets, late payments, incompatible systems, and manual shipping pass-throughs. It’s a real headache for small teams and can translate to a sub-par customer experience.

Building Canal

When we started building Canal a year ago, we saw how eCommerce and partnership teams struggled marketplace executing and set out to build a solution. Our Shopify App is designed to be the infrastructure that powers marketplaces and brand partnerships, allowing any brand with a Shopify store to add new products to their catalog in minutes. We like to think of Canal as the ‘pipes’ that route the right information about orders, shipping, and payments from one store to another, eliminating the need for complicated manual management. We’ve taken care to curate our network of the best eCommerce brands out there, meaning you never have to worry about letting your customers down.

Since launching, we’ve been blown away by the creativity of our users as they curate their marketplaces. Andie Swim now offers all the accessories you need to hit the beach in style, while Fly By Jing and Sanzo used Canal to power a fun April Fool’s Day partnership that made us all wonder whether we’d actually like Spicy Sparkling Water. The creative possibilities are endless, and these marketplaces drive real revenue, too: brands using Canal have seen up to 50% growth in AOV and customer lifetime value, or LTV.

Interested in starting your own marketplace? Learn more about Canal.

About Canal

Canal is the exclusive network transforming the way products are sold online. Our platform enables brands to connect with like-minded brands to sell their products in their stores, gaining novel distribution channels and more deeply connecting with their customers. At the same time, stores can expand their product catalog in a click, gaining new revenue streams, unlocking new customers, and maximizing customer value. Brands shouldn’t have to lower their standards in order to reach new customers. With Canal, you have complete control over what you sell and how you sell it, while never sacrificing authenticity. Learn more at shopcanal.com.