This post originally appeared on Entrepreneur.com - #Growing Your Business
Weed delivery services can bring in additional revenue, so here’s what to do in order to implement the strategy.
8 min read
This story originally appeared on Weedmaps
As a retail cannabis business owner or manager, you’re always looking for ways to offer a higher level of service to your customers. And one potential opportunity to do that? Delivery service.
Offering delivery is a rising trend at dispensaries where laws permit them — and for many consumers, it’s quickly becoming the preferred method of getting cannabis. But how, exactly, do you add delivery service to your retail?
Why Should You Add Delivery?
First things first — before we jump into how to add delivery services to your dispensary, let’s first cover why you should consider adding delivery in the first place.
Adding delivery to your roster of services adds a variety of benefits for your consumers — starting with privacy. While many cannabis consumers are perfectly comfortable walking into a dispensary, there are others who aren’t as open about their cannabis consumption. And for those consumers, delivery allows them to get the products they want and need — without advertising their consumption habits by shopping at a retail cannabis location.
“[Delivery] offers the privacy I feel like so many people seek,” said Mallory Pracale, Vice President of Strategic Initiatives and Special Projects for Terra Tech.
Delivery services offer advantages to retailers and consumers alike. The convenience of home deliveries for busy shoppers, or medical patients unable to visit a store, is unparalleled. Deliveries also provide a tidy revenue boost for cannabis retailers.
Image credit: Gina Coleman/Weedmaps
The convenience delivery offers consumers is also a huge benefit. This is true for pretty much every consumer.
“Everyone has busy schedules, and when you’re looking to have your product delivered you’re able to … not add in that additional stop on your way home and really plan it and have it fit your schedule,” Pracale said. But it’s especially true for medical patients.
Many medical marijuana patients have conditions that can make getting to a retail location challenging. Delivery allows them to get their medicine, even when physically going to the dispensary isn’t possible.
Clearly, delivery is a win for consumers — but it’s also a win for cannabis business owners. Adding delivery services to your retail operations can dramatically increase your revenue — and, according to Pracale, those increases can happen quickly.
“You’re adding, I would say, 15% on average within the first 60 days of launch on top of your bottom line,” Pracale said.
How To Add Delivery To Your Operations
All right, so now that you know some of the reasons why you might want to consider adding delivery to your cannabis retail operations. Let’s talk about how exactly to make that happen.
Figure Out If Cannabis Delivery Is Legal In Your State
The very first step to take before making a move on adding delivery services to your dispensary? Figuring out whether cannabis delivery is legal in your state. If so, what rules and regulations are there around delivery?
Laws about cannabis delivery vary by state. For example, medical marijuana delivery is legal in Massachusetts, but recreational delivery is not — while in Oregon and California, you can get weed delivered regardless of medical or recreational purposes.
The point is, before you make any decisions around delivery, check with your state and local regulators. That way, you can understand the rules and regulations around delivery — and make sure that it’s fully legal before you move forward.
How Much Does It Cost To Add Delivery Services?
If cannabis delivery is legal in your state, the next step in the process is to explore costs. As mentioned, adding delivery can add significant revenue to your retail operations — but there can also be a number of start-up costs to consider.
“First and foremost (and probably the most expensive) cost is the vehicles to deliver [the cannabis] and the cost for maintaining them,” said Tyler Stratford, Manager of Retail Operations for cannabis business consulting firm Canna Advisors.
Retailers should calculate the upfront, operating, and maintenance cost of delivery services. It starts with the vehicle itself and its financing and licensing. Labor and fuel will be the primary day-to-day costs of a vehicle. Plus, a retailer must be able to afford regular and emergency maintenance for the vehicle or fleet.
Image credit: Gina Coleman/Weedmaps
When you add delivery services directly to your retail operations, you’ll need to actually purchase the delivery vehicles. You’ll also need to pay upfront costs (such as loan charges, fees and taxes, and insurance) as well as maintenance costs (like regular oil changes and any necessary repairs).
“In no way do you ever want to fall behind on any kind of maintenance for the vehicle, because there’s a much higher risk of diversion happening if something goes wrong between point A and point B,” Stratford said.
Because you’ll have to hire drivers, there’s also an increase in labor costs. And, depending on volume, there may also be additional inventory costs.
“I’d say the other is the inherent cost of the increase in inventory traffic in your facility,” Stratford said. “You’re going to have to buy inventory to support [delivery] and you might have to make adjustments on how much you buy.”
Pros And Cons Of Hiring Drivers
If you do decide to add delivery and manage the process internally, you’re going to need to hire drivers. Here are some tips to keep in mind as you’re sourcing, interviewing, and hiring delivery drivers:
- Hire According To State Regulations. Just like any other hire for your dispensary, delivery drivers need to be able to pass state-mandated background checks. “Usually in order to work in any of these markets, as an employee, you have to be able to pass a certain level of background check by the state that includes driving offenses,” Stratford said. Before you hire any drivers for your cannabis business, make sure they have the proper clearances. “I would say, regardless of the legal ramifications of it, obviously you want somebody with a clean driving record,” Stratford said.
- Hire Someone Who Can Work Independently. “[When you hire someone in your retail location], they’re able to shadow someone all the time. There’s always someone to direct questions to and things like that,” Pracale said. But that’s not the case with delivery drivers. Your drivers will spend the majority of their time out in the field, alone, making deliveries. They’ll need to be able to answer customer questions, abide by your standard operating procedures (SOPs) and state regulations, and manage the entire sales process, including handling cash, with minimal oversight — which is why it’s important to hire a driver able to think and work independently.
- Consider Promoting From Within. Finding the right delivery driver takes time — and getting them up to speed with your retail operations can take even longer. That’s why you may want to consider asking an existing member of your team if they’d be interested in taking on deliveries. “I think working with someone [internal], maybe that has been a budtender at your store and has that knowledge base of the company and the product, is a little bit easier transition than hiring someone who’s green, for lack of a better word — just because they have a larger scope of understanding [of your business],” Pracale said.
Tips For Delivery Success
Want more insights into how to successfully add delivery to your retail operations? Here are a few more tips:
- Test The Waters. Fully adding delivery to your retail operations is an investment of time, energy, and resources. Before you make the investment, test the waters with an online ordering and pickup service.
- Get Your Standard Operating Procedures In Order. The key to success with adding delivery to your dispensary operations? Having all the details, processes, and SOPs in place before you make your first delivery. “Making sure that you get your processes in line and your SOPs developed — that’s where you really mitigate that risk,” Stratford said.
- Find The Right Fulfillment Tool. Picking the right software product to manage your delivery orders is an important part of setting yourself up for success. Key features to look for include the ability to notify your customers of their delivery ETA, keep an inventory ledger for compliance purposes, and help optimize your routes to fulfill orders faster. WM Orders has a dashboard to help you manage your online orders and notify your customers, and a driver app to help you deliver orders faster.
- Focus On Onboarding. Your drivers are an indispensable part of bringing delivery services to your dispensary, so make sure you set them up for success. “Definitely have an intensive onboarding process so [your drivers] know the exact standard operating procedures of what they’re responsible for,” Stratford said. “The delivery drivers need to know the ins and outs [of making deliveries] and probably the inventory fulfillment within the dispensary.”