Why cannabis is moving online?
The cannabis industry has grown tremendously over the past year, and more so have dispensaries had to begin building their brands online more than ever, and here's why.
Marijuana shops overhaul workforces to cope with online orders, curbside-delivery boom during coronavirus pandemic
Not only in Michigan but Cannabis stores across the U.S. are working to reassign employees to new tasks to cope with a rush of online orders and curbside deliveries amid the coronavirus pandemic.
They’re also considering how the current environment might permanently affect the way consumers purchase marijuana and how businesses might plan for it.
The good news is the expense to implement online ordering isn’t prohibitive, according to some cannabis retailers.
Here are measures marijuana shops are implementing to help the service go smoothly:
They are putting in place a dedicated team that fulfills online orders.
In states where curbside pickup or delivery is prohibited, limiting the number of customers that can enter the store at one time to gather their products.
Strongly encouraging customers to pick up orders promptly.
This new trend has caused a huge demand for well-optimized cannabis web design for an easy contactless way to make orders online.
1. ONLINE ORDERING
For several years, ordering cannabis online has been possible, but now it’s becoming universal. In addition, most retailers have their menus online, meaning even in-person consumers can educate themselves about the products ahead of store visits.
“In terms of technology, there’s been a big shift away from requiring people to touch things or interact as much face to face,” Gomez said.
“We see a lot more dispensary-level innovation just in terms of ‘click and collect’ or … purchase through the apps,” she said.
Gomez says cannabis retail stores are employing more vending machines and kiosks as part of that trend. In addition, the technology has evolved to monitor seed-to-sale tracking while dispensing products, she said.
Mike Bibbey, vice president of marketing at Philadelphia-based multistate operator Ethos, said the company uses kiosks with iPads or Microsoft Surface tablets in some stores.
“The software is a simple internet browser that displays the menu software (from Bend, Oregon-based Dutchie),” he said. “We have plans to develop our software in the future, but we are using off-the-shelf products today.”
Consumers Old and New
Maturo agrees the marijuana industry’s retail future will be more digital. He noted, however, that there will be a difference between how veteran consumers engage with stores online compared to newer consumers.
“People who have more familiarity with the cannabis category are more likely to use online ordering (or) delivery services than people who are new or canna-curious,” Maturo said. “For more experienced users, it’s more about, ‘I know what I want, I know what I’m looking for.’ … It’s all about efficiency.”
The cannabis industry could reach a point where repeat customers set up recurring deliveries of their favorite products—like a monthly CSA (community-supported agriculture) subscription—provided state and local laws evolve with technology.
However, less frequent consumers are more apt to visit a retailer to answer the questions that menus cannot.
“There are still folks who like going into a dispensary and having someone they can ask those questions of and be able to see and feel the products,” Maturo said. “The end goal is … eventually, they’re going to become a more knowledgeable and more active consumer (and) don’t necessarily feel the need to go into the store.”
2. CONSUMER ANALYTICS
A growing number of software platforms aim to help retailers take the guesswork out of understanding their consumers.
Retailers can text or email promotions based on individual consumers’ past buying habits—and more personal recommendations could become the norm within a few years.
“They’re offering curated selections and promotions to specific users based on their past behaviors,” Maturo said, adding that he sees these developments with a cannabis retailer he visits in Illinois.
“I’m seeing a lot more promotions specific to the types of products I want. And I’m getting hit with messaging directing me toward new products similar to other products that I’ve purchased,” Maturo explained. “We’re seeing that development scale pretty fast in the cannabis industry—I’d say it’s arguably much faster than what we’ve seen in the traditional industry.”
He predicted that in the next four to five years, brick-and-mortar stores would be able to target consumers who make physical visits to their stores with individualized promotions and messaging. For example, a consumer could scan an ID at the front door, triggering in-store menus to feature products and promotions that the shopper is most likely to want.
This is more feasible at a store with light foot traffic, Maturo noted.
“The whole store could change when a certain customer walks in, depending on their preferences,” Maturo said, explaining that wall colors, music, and menu boards could all cater to an individual shopper. “You make it very idiosyncratic with the customers inside the store at any given time.”
Gomez agrees that consumers want solid product recommendations and a smooth retail transaction.
Technologies that streamline the product-exploration process are helpful, but some systems that live on an iPad can provide that level of education as well, without bells and whistles.
3. NAMES OF NECESSITY
As cannabis expands from its core demographic to a “more universal” audience, some consumers won’t have time to review menus as experienced buyers do or question budtenders like newcomers. For them, products named after the desired effects will simplify ordering, making “it a little bit easier for the end consumer,” Maturo said.
Garden Remedies, a small chain of medical and recreational dispensaries in Massachusetts, carries two in-house vape brands—one eponymous, the other called Seven East—with names such as Calm, Clarity, Energy, Focus, and Serenity.
Jeff Herold, co-CEO of Garden Remedies, said that the company’s customers were instrumental in naming the products. “We wanted to increase communication about what our various products do to make consumption more accessible and positive for all users, whether established or new,” he said.
4. FEDERAL LEGALIZATION
National marijuana legalization will trigger momentous changes and challenges for cannabis. Maturo believes federal legalization will drop the final barriers keeping mainstream chains from entering the industry in retail.
The retailers best positioned for that are convenience stores such as 7-Eleven and chain drugstores like CVS. Drugstores are accustomed to dealing with highly regulated products, and convenience stores check more IDs per day than any other retailer, which is an advantage from a legality standpoint, Maturo said.
“There is also a lot of overlap between convenience store shoppers and cannabis users,” he added.
Convenience stores were the first to start offering CBD products such as beverages, topicals, and tinctures. However, Maturo said the coronavirus pandemic pushed many CBD users to shop online, decreasing convenience store sales.
Enter the Mainstream Retailers
Mass retailers could also enter the industry, providing competition and new distribution channels, Maturo said.
“That’s not necessarily bad news for the MSOs,” he cautioned, referring to multistate operators. “Just like Coke and Pepsi are the predominant soda brands sold by every CPG retailer in the country, some MSOs will probably have the opportunity to get into some of those major retailers.
“I don’t think that will happen anytime in the next three or four years because these things always take time. But when that becomes a reality, it will shake up the retail landscape that we see today,” he said.
Gomez was less bullish on the idea that cannabis would be sold at mainstream retail. Even with federal legalization, she said it would be long before marijuana is available through national chain stores such as Walmart.
Cannabis retailers, however, shouldn’t sit on their hands.
“There’s a great deal of opportunity to make this experience more exciting for consumers,” Gomez said.
“If you looked back about four or five years ago, the average dispensary was a very drab and depressing experience. Women historically have hated shopping at dispensaries, which has caused a lot of lost revenue from female consumers,” she said. “Now, cannabis dispensaries have become a lot more upscale. … A lot of MSOs have worked hard to make these stores very approachable for a wider range of consumers.”