COVID-19 has drastically changed the way we live and work day-to-day. As essential businesses, cannabis dispensaries have needed to adapt quickly to these changes, both regulatory and sanitization-wise, to keep their doors open and staff and patients safe. But as open-ended social distancing practices take root, and an air of skepticism around in-person contact grows, operators need to be more agile than ever when it comes to optimizing their businesses to thrive within our new state of normal.
Move Over In-Store Sales, Express Ordering is on the Rise
It’s no secret that in-store sales have been on the decline since the COVID-19 outbreak began. While state-mandated social distancing and shelter-in-place orders have heavily influenced the transition toward express ordering so far, it's people’s propensity for routine, convenience, and speed of service that will cement it as commonplace long after the mandates have been lifted.
Already, data collected through AskTreez — the first-of-its-kind, real-time cannabis market insights engine — shows that nearly 30% of all dispensary sales are now made up of fulfillment-style methods, like express, pick-up, and delivery. This highlights a 20% boost when compared to pre-COVID norms! While in-store orders still make-up the lion’s share of sales today, dispensary operators everywhere would be remiss to ignore what this trend is telling us about the future preferences of cannabis consumers.
*Express ordering consists of express, pick-up, and delivery sales.
Convenience, Convenience, Convenience
It’s often said that ‘location’ is the most important factor in determining value, but you only need to look as far as a few of the fastest growing industries over the past year — 3D printing, autonomous vehicles, meal kit/grocery delivery services — to see a new main value-driver emerging. Convenience.
These days, we have access to more technology than ever before, which has drastically changed our relationship with time. Despite having the same number of hours in each day, our 24/7 connected culture has left us feeling busier and more time-starved than ever. This intersection of busyness and technology places a premium on convenient, time-saving options, and for the cannabis consumer, it’s no different. The same people who are opting to have prepaid groceries delivered to their doorstep, are also looking to save time and prepay for their orders when it comes to purchasing cannabis — whether that be in-store or online.
Retailers who lean into this developing trend by integrating modern creature comforts into their standard offerings today (read: VIP pick-up, drive-thru, delivery, integrated payments, etc.), will be far better positioned to reap the benefits of the purchasing habits of tomorrow. While shelter-in-place and social distancing will be phased out over time, this trend is here to stay, and it’d be wise to adapt to it sooner rather than later.
So with this in mind, let’s walk through a few practical ways dispensary owners can keep loyalty and margins high by optimizing their operations to prioritize safety, convenience, and speed of service.
Implement Fulfillment-Centric Operational Strategies to Reduce Exposure and Increase Convenience
One of the biggest modern conveniences customers have come to expect is online ordering. Since the pandemic began, consumers have shifted more of their spending online to avoid prolonged in-person exposure, and handling notoriously unsanitary cash. This is great news for retailers, considering eCommerce orders boast an Average Order Value (AOV) of about 20% higher than in-store purchases. Even though online shopping is accelerating, over-the-counter sales aren’t going anywhere anytime soon. So retailers need to be implementing changes that capitalize on the time-savings and reduced exposure that fulfillment-centric workflows afford, in ways that apply to both in-person and online sales.
Mobile Payments and Digital Receipts — The Ultimate 1-2 Punch for Creating a Completely Touchless Transaction
Whether a customer is physically entering your store or not, the fewer things that exchange hands, the better... particularly cash. While cannabis payment solutions are on the rise, not all solutions are created equal. Options like ACH payments that don’t require account creation — and allow prepayment links to be embedded directly into your online menu or sent via SMS — offer the greatest level of convenience, security and cleanliness, with the lowest barrier to entry. A staggeringly important point when you’re aiming to increase adoption as rapidly as possible, especially in light of the recent coin shortage.
Many POS or eCommerce providers integrate with various 3rd party payment systems, so which software you leverage will determine what choices exist for you. For Treez customers, we offer two fully-integrated TreezPay solutions — ACH payments (a.k.a. One-Click Mobile Payments) that lets customers prepay for their orders with a single click on their mobile device, and Cashless ATM for in-store purchases. Moreover, our data shows that TreezPay customers are seeing AOVs of more than 30% higher when compared to cash-only transactions. Because when consumers aren’t limited by the physical cash in their wallet, they’re eager to explore your selection at a much faster clip. While there are pros and cons to any payment solution, pursuing an option that integrates into your native POS system is hands down your best bet.
But the lowering of exposure while increasing convenience that’s afforded by payment processing can also be applied to the receipt. And while it may be a small touchpoint, every reduced touchpoint matters.
If your Point of Sale provider offers the ability to distribute receipts digitally — either by SMS and/or email, as Treez does — then enable it immediately. Besides saving you money on receipt paper (and being easier on Mother Earth), digital receipts enable you to deploy a completely touchless shopping experience when coupled with digital payments. This 1-2 punch is a highly marketable selling point to safety-oriented customers and has the potential to be a key differentiator over the nearby competition.
Now that we’ve discussed digital strategies, let’s talk about physical operations.
Optimize Internal Operations Around Speed of Service
The location and anatomy of your business will determine if you’re able to deploy low exposure options like curbside pick-up or delivery. Some businesses may even be able to launch drive-thru, taking speed, convenience, and scalability to the next level. But for many, these options may not be feasible (or even allowed) making it that much more important to apply the same low-exposure, convenience-first logic to the in-store experience as well.
Enter: VIP express pick-up lanes and prepaid prioritization.
These days, fewer people than ever are able to physically enter your store at once. Meaning, you need to make the most of your interior space and fulfillment workflows to keep margins high. Fortunately, this extra square footage presents a massive opportunity for retailers to create a VIP express experience with very little effort.
If you have the space, consider designating one or more POS terminals to a VIP express lane that offers priority service to customers who order in advance and/or prepay online. In addition to creating a level of exclusivity — breeding desirability among nearby onlookers — it also allows you to process more transactions in less time and lean into the evolving preferences of your customer base. A win-win for both sides. The reason this small change is so effective at driving organic adoption is because it makes the added benefit highly visible to all customers, particularly those that aren’t receiving it.
Another tried and true technique you can use to quickly increase adoption of things like cash-free prepayments or advanced ordering is by offering a small monetary reward (think: a free pre-roll or $5 off discount) for 1st time adopters. This type of promotion can be used in marketing blasts or outlined on in-store collateral to drive more streamlined, repeat business as well. But remember, nothing beats a superior customer experience.
Summing It Up
At the end of the day, no matter which digital or operational avenues you pursue, just remember it’s speed, safety, and convenience that should be at the heart of every decision you make. Because while COVID may have been the catalyst for you to incorporate a more fulfillment-oriented mindset into your day-to-day operations, the demand for low-exposure expediency is here to stay. And those that are able to seamlessly incorporate them into their overarching strategy are sure to reap the benefits for years to come.
Ready to learn more about California's #1 POS provider?
Feel free to get in touch with us — we look forward to showing you around!