For DTC brands that want to link up with “like-minded” companies, where do they go? The cofounders of Canal want it to be their startup, which emerged out of stealth today.

• The company, started by Bennett Carroccio, Liam Kinney, and Clay Schubiner, raised $4.5 million in seed funding in March; Andreessen Horowitz (Connie Chan) and Forerunner Ventures (Brian O’Malley) led the round.

The details: Canal isn’t for consumers, but a Shopify-esque platform that empowers existing storefronts to sell products from suppliers with a similar ethos—like a dating app for brands that connects them with a perfect match. Think a kettle brand selling coffee and tea or a chef selling cookware or dishes.

“We’re not the shelf or the products you put on the shelf. We are your access to inventory,” Carroccio, Canal’s CEO, told Retail Brew.

While dropshipping networks (like AliExpress or SaleHoo) already let stores purchase items from a third-party supplier, Canal’s value proposition lies within its “curated network” of high-quality brands, it said.

• Some of the first supplier brands on Canal’s platform include Fellow, Hydrant, Birthdate Co., and Neuro. Haus, Dims, LesserEvil, and Clio will soon join the lineup.
• Canal doesn’t charge a monthly or upfront fee to host products, but takes a commission when it facilitates a transaction.

Testing the waters: Between Instagram and Facebook and all the marketplaces that have popped up, brands are eyeing new distribution channels. But they don’t want to sacrifice authenticity, Canal said.

“They’re afraid of losing control of the relationship and losing control of their products and their brand identity,” Liam Kinney, the startup’s chief product officer and cofounder, explained.

• Canal lets brands tailor their relationships with suppliers, customizing everything from price to inventory.

In good company: There’s been an uptick in more curated networks recently, but most are consumer-facing to help shoppers make sense of all the noise. (Look at the introduction of marketplaces like The Fascination, which only features DTC brands it has vetted.)—JS

Last week, Retail Brew hosted the latest edition of our event series, The Checkout*, where we discussed the lifecycle of CPG products. Morning Brew Executive Editor Josh Sternberg spoke to Emily Silver, PepsiCo’s VP of innovation and capabilities.

The upshot: To put it simply, the production, marketing, and distribution of a CPG product isn’t that simple. It takes a lot of trial and error.

Click here to watch the full replay, and keep scrolling for our top takeaways.

Testing, testing

“I think 90% of innovations still fail across industries. And so you’ve got to be realistic and objective with yourself and with the team and with the company about what’s going to work,” Silver told us.

For example, last year PepsiCo brought a sleep-aid drink to market called Driftwell that Silver explained performs well online, but is struggling in traditional retail stores. The reasons being twofold: small package size and too high of a price point.

“We’ve got to figure out how to pivot on that, but that’s a good, ‘I told you so’ story,” she said.

Time is of the essence

Avoiding these mishaps is critical during the R&D process, Silver noted, so the company can prepare for “what’s next...helping us drive that conversation and explore and get ready for the next trend in five, 10 years from now.” Especially since the process of getting a product to market is now faster than ever—thanks to consumer demand.

• Silver’s team asks R&D for prototypes a few weeks after an idea is created to go into testing. (Packaging is what takes the bulk of the time—about a year or two—due to juggling supplier relationships.)

“One of the things that we’ve done a lot of work on in the past few years is try to shorten the side of the cycle from idea to in-market execution,” Silver told us. “Consumers are moving so fast, there’s so much dynamism in the choices that they’re making that we need to make sure that we’re capitalizing as quickly as we can.”

PepsiCo, for instance, recently introduced a mood-stabilizing beverage called Soulboost, which took less than a year to bring to market—one of the company’s fastest examples of doing so, Silver said.

• Mood management was a trend PepsiCo’s R&D team noticed prior to Covid, but it’s one that the pandemic put into overdrive.

A helping hand: The consumer perspective and data is vital when PepsiCo brings a product to market, but Silver said retailers are just as important in providing feedback on if it will be successful. “Sometimes we launch things that they say are not going to work, and they’re usually right.”—KM

*This event was sponsored by Amazon Advertising.

Aldi’s new vibe: No friction, no problem. The company will soon pilot its first cashierless store in the Netherlands.

Grab and go: Using Trigo algorithmic technology, the Aldi Nord store will track shoppers' movements and product selections within the store to let shoppers pay digitally without stopping at cash wrap. (No, this is not a Black Mirror grocery-store bottle episode. The system doesn’t use facial recognition or any other biometric scans or identifiers...but still.)

“With frictionless technology, the general public will be able to experience ease of shopping, while retailers will benefit from better inventory control, shrinkage reduction, as well as a positive customer service focus,” Michael Gabay, Trigo cofounder and CEO, said in a statement.

Aldi joins a growing group of retailers embracing frictionless tech. Amazon, for example, has been using its “Just Walk Out” system at Amazon Go, Amazon Fresh, and some Whole Foods stores. It also began licensing its tech to other retailers like airport giant Hudson.

• Verizon recently held its Express Shop pop-up, where shoppers tapped their credit cards to enter and had their purchases tracked by AI-powered cameras.

+1: Meanwhile, Aldi Süd is introducing its own take on frictionless shopping with its first checkout-free store in southeast London. Fancy that!—JG

Today’s top retail reads.

Pitch perfect? Instacart’s push into advertising means the company has focused on hiring up. A lot of those new faces are coming from Amazon. (The Information)

Treasure trove: From merch to collabs, museum IP has become a money maker in China, thanks to Gen Z. (Vogue Business)

Another scoop: The founders of Ample Hills filed for bankruptcy in March 2020 and soon sold the company for just $1 million. Now, the pair are back with a new perspective—and a new parlor. (Bloomberg)

At the mall, it’s where band tees are the only tees. In Retail Brew, it’s where we invite readers to weigh in on a trending retail topic.

Restaurants were one of the hardest-hit industries at the pandemic’s peak. One saving grace was the makeshift outdoor dining patios that expanded seating capacity while indoor dining was still heavily restricted.

• There’s now a nationwide push to make those street patios permanent. San Francisco and New York City have already passed measures in favor of doing so, but opponents say they cause more noise and restrict parking spaces.
• To-go cocktails are another pandemic-era innovation that California is gearing up to make permanent due to their popularity.

Our question: Should restaurants be able to keep offerings like street dining and to-go cocktails? Cast your vote here.

Checking in: Last week, we asked if retailers should urge customers to shop earlier. Nearly two-thirds of you (62.3%) said to sound the alarm, while the remaining 37.8% think shoppers will shop when the time is right for them.

Catch up on the Retail Brew stories you may have missed.

• Warby Parker’s strong debut could be a good sign for brands looking to go public
• HomeGoods (finally) introduces e-comm
• Surveying if consumers are embracing cannabis as shoppers