13 Dec
At first glance, hearing words like ‘cannabis technology’ and ‘weed tech’ can be easily dismissed as buzz words but take a deeper look and you’ll see how technology is transforming the way cannabis businesses are run. In order for companies to break into the legal cannabis market, they needed to rapidly build operations in a digital-first environment. Today, knowing how to leverage and optimize technology is vital across all verticals of the cannabis industry. To that end, here are five ways technology is quietly transforming the industry, and how you can gain a competitive edge if you take advantage of them.
Understanding where you rank:
The cannabis land grab is now over in Canada. In Ontario alone, there are over 1400 retailers in the market, more than all of California combined. Companies are now asking themselves how to stay profitable and increase market share. Naturally, this is going to lead to a shakeout that separates the highly-efficient operators from the laggards. The first step in getting ahead is having an understanding of where you rank amongst your competitors. While you may know how your business is doing, it can be a challenge to see how you fare against others in the market, especially in a niche industry still in its infancy. By using a platform that has access to market data and relevant KPIs, cannabis companies can easily compare themselves against their competitors and see where exactly improvements need to be made. This applies not only to retailers but also to licensed producers, manufacturers, and companies with large stakes in the industry.
Digging deeper into where you’re winning and losing:
Once you know where you stand, it’s time to put together a plan for where you want to go. A comprehensive data platform allows you to dig deeper into key metrics that are important to your specific segment.
For retailers, gross margin is a metric that matters. As shown above, most retailers in Ontario struggle to maintain margins over 40%. Optimizing the pricing of 250 SKUs on a daily basis while keeping tabs on the competition down the street is a near-impossible task for a retail employee, but is one that is well suited for a machine. Time is money after all, and companies win by using proven, readily available technology that integrates into their decision-making processes.
If you’re a brand, having full visibility into where your category, brand, and SKUs are performing is critical. The ability to focus sales efforts on closing gaps in distribution whilst simultaneously reinforcing areas of strength is key to driving week-over-week sales performance.
Spot trends early to forecast and plan accordingly:
Often what really sets winners apart from their competitors is simply being better at planning and forecasting. The cannabis industry is fast changing and complex with multiple sizes, strains, price bands, and potencies. A great recent example is a dramatic shift in the vape category towards larger +1g formats. (see below).
Being able to easily visualize all these dimensions and identify trends is critical in making both small and large pivots. If you are a retailer you want to be stocking up on the most popular products and ditching the duds because your survival depends on it. If you are a licensed producer you should be looking to stay ahead of the competition and obtain category leadership. This may mean making difficult decisions about a product that has historically done well but is no longer flying off the shelves. Brands need to be able to make quick decisions on whether they should stop producing the product or find other ways to better market, price, or improve it. It’s about “skating where the puck will be” and deciding on the appropriate actions as early as possible in the product life cycle.
Accessing data all in one place:
One of the major benefits of cannabis technology platforms is being able to unlock and access all the data in one place. For most companies, it’s a continual challenge to combine, clean, and consolidate data from multiple sources. Trying to update and integrate multiple data sources can be a resource-intensive task that few can afford. Companies benefit from a consistent single source of truth to make unbiased and unambiguous operational decisions quickly.
Spend less time in spreadsheets:
Adaptive technologies allow you to spend less of your time in email and excel, whether it’s normalizing data, finding insights, or creating reports. Cannabis platforms are now fully integrated with leading-edge analytic tools such as Tableau, Looker, and Power BI.
Everything’s calculated for you automatically, and in just a few clicks, presentation-ready reports are available. You get the power of a fully-fledged BI team at your fingertips at a fraction of the cost.
As the cannabis industry struggles to meet the expectations that investors had in 2018, companies need to find ways to drive operational efficiency and profitable growth. While the use of technology isn’t new, it’s an opportunity to adopt proven technology platforms to solve the problems that plague other industries in a rapidly growing and relatively open ecosystem. The business drivers are simple: increase sales, margins, and customer engagement whilst reducing costs.
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