Before legalizing recreational adult-use cannabis in 2016, the makers of flower, vape, edibles, and topicals sold directly to retailers with the help of in-house sales teams. The medical marijuana cardholders would simply pack up their cars with finished goods and make their rounds to the dispensaries on their route — hawking weed along the way.
These salespeople were invaluable faces of the company as they pitched each product face-to-face. The resulting relationships turned into strong brand loyalty from their dispensary partners. When they were lucky, the brand reps would have a chance to meet brand loyalists while visiting the shops and sell direct to consumers. Yes, there was once a time when you could offer free samples of your products directly to consumers inside the dispensary.
With the shift from medical to recreational, new regulations required a stricter set of delivery rules. The infrastructure needed to store and distribute cannabis products required distribution companies with backend capabilities for this kind of operation. This caused most brands to start selling their products to distributors, who then handled the bulk of sales.
While this lightens the load in some ways, it leaves the brands wondering what would happen if they could find a new way to sell D2C? And that’s exactly what’s happening as some California cannabis brands are now bypassing dispensaries altogether.
Weed Brands Selling Direct to Consumer
The market is absolutely flooded with every kind of smokeable and edible cannabis product imaginable. Almost any cannabis brand in California will say that the biggest struggle they face is competition.
When a brand sells to a distributor, they rely on at least two outside sales groups to pitch their products. First, the brand sells to a distributor, who is then responsible for selling to a retailer. The limitation here is that the sales team working for the distribution company is also peddling handfuls of other competitive products. If they built their catalog wisely, they have diversified product offerings not to have too many similar competing products, but sometimes that isn’t the case.
Also, unless arranged beforehand, the product placement is in the hands of the retailers. That means that the brand has zero say in where their products are displayed, which can drastically affect sales. Consider a cannabis brand that produces vapes pens, dabbable extracts, and edibles. Many dispensaries separate their products by product type, meaning those three items end up in different display cases. But the brand would benefit from showcasing their diversity, not to mention increase brand awareness, by having their items displayed together.
Then, the last avenue for sales is the dispensary staff. Often, retail staff recommends their favorite products to their customers. This isn’t an attempt to favor brands, but rather, they tend to offer what they’ve tried. If a budtender hasn’t tried a particular brand, it’s less likely to get the recommendation. That’s just good customer service, but it also means unequal brand pitches are happening at the service counter.
Lastly, the brands typically receive insufficient sales data about their consumer, if any at all. For the most part, they are lucky to receive a sales report generated by add-on software that dispensaries are using to track metrics from their registers. It might include information about most products sold and on which days, but it doesn’t tell them much about the actual customers other than their collective buying habits.
So, what’s the remedy for this clunky sales funnel, and how can brands focus their efforts and attention directly on their customers? By moving from traditional retail environments and selling direct to consumers.
‘Direct to Consumer’ Concept
Selling direct to consumer allows buyers to shop directly from brands they love without ever stepping foot in a dispensary. Customers can easily buy weed online and have it delivered straight to their door. For many people, this is the ideal scenario. While the dispensary experience can be enjoyable, a lot of customers know what they want. And even if they don’t, the online shopping experience makes it easy to review products before purchasing.
As far as user experience for the consumer, consider a scenario where a customer is shopping online at Warby Parker for a pair of glasses. They’ve viewed all options and decided on their purchase. Once they add the item to their cart, they click “buy now”. Except rather than proceed through the Warby Parker check out, they are sent to Sunglasses Hut to fulfill their order. The customer experience might be a little confusing, and even feel somewhat suspicious, which leads the customer to cancel the order altogether. By white labeling the check out process for brands, the customer is able to walk through a seamless online shopping experience from start to finish.
For cannabis brands, the benefits of selling D2C are tremendous. Cutting out the middleman saves money better spent on advertising and marketing, or investing in new product launches that meet consumer demand.
Moreover, competition can be tough for brands that sell to distributors. Some distributors have upwards of ten competing products on one sales sheet, leaving the brands wondering why they can’t outrank their competitors. Going D2C helps cut out the noise from such a cutthroat sales channel. Ultimately, D2C cannabis sales are the shift for many California cannabis brands looking to connect more deeply with their customer base.
How Are Brands Offering D2C?
Selling D2C doesn’t mean reverting to in-house sales for all cannabis brands. That’s not feasible, nor is it economically efficient. But rather than using large distribution channels, brands are partnering directly with delivery service providers to fulfill their D2C orders.
In this scenario, a customer hops online to shop for their favorite brands or products. They can scan for delivery regions and find a provider that delivers in their area. Once they place their order, a driver will pick it up and deliver it to their address.
The benefits for the consumers are clear — weed right to your door. But for the brands, the benefits are invaluable. In building online shopping sales funnels, the companies are gaining access to their customers’ digital footprint. They can leverage this data to enhance the customer experience, directly market to their target audience, and quickly react to any customer service issues that might arise during the buying experience. This kind of data can push a brand to the top of the heap if they build their strategy around it wisely.
Examples of the D2C Shift
There are plenty of California cannabis brands that are hopping on the train of D2C sales. Some of the major players that are doing it right are highlighted below.
The BLOOM Brands
The BLOOM Brands have been around since 2014 and make some of the most flavorful live resin on the market. Their lines of vape pens are available throughout California, and they are one of the first brands to explore D2C sales and delivery. Visit their online shop to explore their exclusive strains and place an order online. The order minimum is $65, with a $10 delivery fee for orders under $95. For all orders over $95, delivery is free.
“Opening up the D2C funnel has enabled us to really ramp up our owned marketing channels and grab hold of our customer data for effective communications.” -Casey Ly, The BLOOM Brands
Don’t miss out on the fantastic flower sold by Flow Kana. This is some of the best bud in California, and that’s honestly saying something. They partner with multi-generational growers who pride themselves on sustainability and top-shelf genetics. Flow Kana sells sun-grown, small-batch cannabis, and currently offers delivery to L.A., San Diego, Orange County, San Jose, San Francisco, and Oakland via their online shop – Flow Direct.
“We see the D2C channels as potential to make up 20-50% of our sales within 12 months.” -Mark Gordon, Flow Kana
Makers of the beloved Pabst Blue Ribbon beer have launched into the cannabis scene with a high seltzer. Their fruit-flavored bubbly waters offer a “different kind of buzz” and contain only five or ten milligrams of THC for a perfect mini dose of cannabis. Customers are easily able to shop online through the Pabst site, and experience a quick and easy ordering process, with delivery right to their door.
“Customers and brand loyalists have been thrilled with the opportunity to purchase online, and purchase directly from us at the best values.” -Mark Faicol, Pabst Labs
The Importance of Convenience
In this world, convenience is king. Especially over the last 18 months, with the massive impact of COVID-19, cannabis brands have quickly realized the need for D2C sales convenience. Consider the number of people who work from home and have shifted to having many of their needs, like groceries, pet food, and toiletries, delivered straight to their door. For those that travel less these days, hitting the dispensary on the route home from work just might not be happening as frequently. But cannabis consumption is higher than ever, so the convenience of shopping online is a game-changer.
Then, if someone is shopping online for their favorite gummy brand, but it’s not there, do you think they might just give something else a try? Probably. In that tiny moment, even the strongest brand loyalist might become a fan of the competition. And fortunately, there are many options for cannabis delivery services in California. The smartest brands with a forward-thinking vision will not allow their customers the opportunity to find a new favorite. And so, they pivot.
Recreational cannabis sales are expected to reach $5 billion in California alone by 2022. The savviest brands that want to engage their customers and turn them into brand loyalists will ultimately be faced with the challenge of finding the best way to offer timely delivery and unrivaled customer service, all while making the buying experience simpler for their audience. Because of this, direct-to-consumer sales are the next big thing for California cannabis.