We spend a lot of time online these days. The average American spent on social media alone during 2020, amounting to 1300 hours per person last year. In addition to time, we also spend more of our money online than ever before. The share of global retail sales arising from e-commerce in 2020—accounting for 19 percent of retail spend, up from 16 percent the year prior—supercharged by a pandemic that forced consumers to embrace and discover more ways to buy online.
Despite this boom, customer acquisition is increasingly difficult in the current commerce ecosystem. Throughout our portfolio, we’ve been hearing about rising CPA on Facebook and the challenges resulting from Apple's new privacy rules, not to mention increased competition from an ever-expanding number of brands. If you’re facing something similar, you’re not alone.
The opportunity to transact is increasingly massive, as people talk about products more than ever before on social channels like TikTok, Instagram, and YouTube. Unfortunately, the current methods of monetization—namely, affiliate programs—are a leftover remnant of the early internet. What these programs give in terms of ease of participation, they lack in effectiveness, converting at roughly ⅓ generic site traffic. Conversion should actually be higher, as the intent is much higher than a generic site visit.
It makes sense when you think about the steps involved: An influencer or curator needs to provide their followers with a unique code, which users need to remember as they leave the app. They then need to open another site on a separate browser to shop, pick out the right item, punch in the original affiliate code, and check out… if the code even works anymore. It’s surprising that any purchases happen at all.
is solving these problems in a way that benefits the brand, the curator, and the buyer. The team is building a platform to enable distributed checkout, so people can buy products wherever they discover them—whether that’s from a makeup artist tutorial on YouTube, a travel newsletter hosted on Substack, or another complementary brand looking to cross-sell products. Similar to how Plaid opened up the world of next-generation digital finance applications by making connections seamless, Canal is looking to do the same for commerce.
With a few clicks and a brand’s approval, anyone can be up and selling. This surface-level simplicity highlights the magic of the Canal platform behind the scenes. Not only does the catalog need to be updated, but the underlying supply chain needs to be fluid in order to drop ship products from multiple suppliers all connected through one checkout flow. In a landscape that’s saturated with expensive and unreliable distribution channels, Canal unlocks trusted new channels for brands, generates new selling experiences for curators, and allows consumers to discover and buy products directly from platforms they already use.
Ultimately, the problem with the way we currently transact is one of integration & automation, which is why we believe this team is uniquely qualified to address it. Canal's product team is led respectively by CTO Clay Schubiner and CPO Liam Kinney; hailing from Canvas and Airbnb, these two led efforts in integration and AI respectively, two skills critical to the task here. CEO Bennett Carroccio joins Canal from our co-investor, a16z, where he worked on marketplace investments during his four-year tenure. With a strong background in business development at startups before he joined the VC, he understands the delicate balance of supply and demand necessary to this new model of commerce.
At Forerunner, we know the future of commerce, but they need better tools to allow their followers to transact on the same platforms they frequent for inspiration. Canal is building a more intuitive digital future, and we’re eager to see the novel experiences they empower in this new world of distributed commerce.