Prior to the legalisation of recreational adult-use cannabis in 2016, manufacturers of flower, vape, edibles, and topicals sold directly to retailers through in-house sales teams. Medical marijuana cardholders would simply load up their cars with finished goods and make their way to the dispensaries along the way, hawking weed along the way.
As they pitched each product face-to-face, these salespeople were invaluable to the company. Their dispensary partners developed strong brand loyalty as a result of the resulting relationships. When they were lucky, the brand reps would have the opportunity to meet brand loyalists while shopping and sell directly to consumers. Yes, there was a time when you could directly offer free samples of your products to customers inside the dispensary.
With the shift from medical to recreational use, new regulations necessitated a more stringent set of delivery guidelines. The infrastructure required to store and distribute cannabis products necessitated the involvement of distribution companies with backend capabilities for this type of operation. As a result, most brands began selling their products to distributors, who handled the majority of sales.
While this alleviates some of the burden, it leaves brands wondering what would happen if they could find a new way to sell D2C? That is exactly what is happening, as some California cannabis brands are now avoiding dispensaries entirely.
Direct-to-Consumer Cannabis Brands
Every type of smokeable and edible cannabis product imaginable is available on the market. Almost any cannabis brand in California will tell you that the most difficult challenge they face is competition.
When a brand sells to a distributor, at least two outside sales groups pitch their products to the distributor. First, the brand sells to a distributor, who in turn sells to a retailer. The limitation here is that the distribution company’s sales team also sells a slew of other competitive products. If they built their catalogue wisely, they would have diversified their product offerings so that they did not have too many similar competing products, but this is not always the case.
Also, unless previously agreed upon, product placement is in the hands of the retailers. That means the brand has no control over where their products are displayed, which can have a significant impact on sales. Consider a cannabis company that sells vape pens, dabbable extracts, and edibles. Many dispensaries categorise their products by product type, so those three items will be displayed in different display cases. However, by displaying their items together, the brand would benefit from showcasing their diversity as well as increasing brand awareness.
The dispensary staff is the final sales channel. Retail employees frequently recommend their favourite products to their customers. This isn’t meant to favour brands; rather, they tend to offer what they’ve tried. If a budtender hasn’t tried a particular brand, he or she is less likely to recommend it. That is simply good customer service, but it also indicates unequal brand pitches at the service counter.
Finally, brands typically receive insufficient, if any, sales data about their customers. Most of the time, they are fortunate to receive a sales report generated by add-on software used by dispensaries to track metrics from their registers. It may include information about the majority of products sold and when they were sold, but it does not reveal much about the actual customers other than their collective purchasing habits.
So, what is the solution to this clumsy sales funnel, and how can brands direct their efforts and attention to their customers? By shifting away from traditional retail environments and selling directly to customers.
Concept of ‘Direct to Consumer’
Buyers can shop direct from brands they love without ever entering a dispensary when they sell direct to consumer. Customers can easily purchase marijuana online and have it delivered right to their door. This is the ideal scenario for many people. While the dispensary experience can be pleasurable, many customers know exactly what they want. Even if they don’t, the online shopping experience makes it simple to compare products before making a purchase.
Consider the following scenario: a customer is shopping online at Warby Parker for a pair of glasses. They’ve weighed all of their options and made a decision. They add the item to their cart and then click “buy now.” Instead of going through the Warby Parker checkout, they are directed to Sunglasses Hut to complete their order. The customer experience may be a little perplexing and even suspicious, leading the customer to cancel the order entirely. The customer can have a seamless online shopping experience from start to finish by white labelling the check out process for brands.
The advantages of selling D2C to cannabis brands are enormous. Cutting out the middleman saves money that could be spent on advertising and marketing, or on new product launches that meet consumer demand.
Furthermore, for brands that sell to distributors, competition can be fierce. Some distributors have up to ten competing products on one sales sheet, leaving brands scratching their heads as to why they can’t outrank their competitors. Going direct-to-consumer reduces the noise in such a competitive sales channel. Finally, direct-to-consumer cannabis sales represent a paradigm shift for many California cannabis brands seeking to connect more deeply with their customer base.
How Do Brands Provide Direct-to-Consumer Services?
Selling D2C does not imply that all cannabis brands will return to in-house sales. That is neither feasible nor economically efficient. Instead of relying on large distribution channels, brands are partnering directly with delivery service providers to fulfil direct-to-consumer orders.
A customer goes online to shop for their favourite brands or products in this scenario. They can search for delivery regions and find a provider in their area. After they place their order, a driver will come and pick it up and deliver it to their home.
The advantages for consumers are obvious — weed delivered right to your door. However, the advantages are priceless for the brands. Companies gain access to their customers’ digital footprints by creating online shopping sales funnels. They can use this data to improve the customer experience, market directly to their target audience, and respond quickly to any customer service issues that may arise during the purchasing process. This type of data can propel a brand to the top of the heap if a wise strategy is built around it.
Exemplifications of the D2C Shift
There are numerous California cannabis brands that have jumped on the D2C sales bandwagon. The following are some of the major players who are doing it right.
The BLOOM Labels
BLOOM Brands has been making some of the most flavorful live resin on the market since 2014. Their vape pen lines are available throughout California, and they were among the first brands to experiment with direct-to-consumer (D2C) sales and delivery. Visit their online shop to learn more about their exclusive strains and to place an order. The order minimum is $65, with a delivery fee of $10 for orders less than $95. Delivery is free on all orders over $95.
“By opening up the D2C funnel, we were able to really ramp up our owned marketing channels and seize control of our customer data for effective communications.” -The BLOOM Brands’ Casey Ly
Don’t miss out on Flow Kana’s fantastic flower. This is some of the best bud in California, and that is saying a lot. They collaborate with multigenerational growers who take pride in their sustainability and top-tier genetics. Flow Kana sells sun-grown, small-batch cannabis and currently delivers to Los Angeles, San Diego, Orange County, San Jose, San Francisco, and Oakland through their online shop Flow Direct.
“We believe that D2C channels have the potential to account for 20-50 percent of our sales within the next 12 months.” -Flow Kana’s Mark Gordon
The makers of the popular Pabst Blue Ribbon beer have entered the cannabis market with a high seltzer. Their fruit-flavored bubbly waters provide a “different kind of buzz” and contain only five or ten milligrammes of THC, making them an ideal mini dose of cannabis. Customers can easily shop online through the Pabst site and enjoy a quick and easy ordering process, as well as delivery right to their door.
“Customers and brand loyalists have been ecstatic about the ability to buy online and directly from us at the best prices.” Pabst Labs’ Mark Faicol
The Value of Convenience
Convenience reigns supreme in this world. With the massive impact of COVID-19, cannabis brands have quickly realised the need for D2C sales convenience, particularly in the last 18 months. Consider how many people work from home and have many of their needs, such as groceries, pet food, and toiletries, delivered right to their door. For those who travel less these days, stopping at the dispensary on the way home from work may not be as common. However, cannabis consumption is at an all-time high, so the ease of shopping online is a game changer.
Then, if someone is looking for their favourite gummy brand online and it isn’t available, do you think they’ll try something else? Probably. Even the most ardent brand aficionado could become a fan of the competition in that split second. And, fortunately, cannabis delivery services in California are plentiful. The most forward-thinking brands will not give their customers the opportunity to discover a new favourite. As a result, they pivot.