Special Delivery

Written by :
Andrew Watson and Gianna Gard
May 15, 2020

It’s the age of on-demand services.

 

In a culture already rooted in the convenience of home delivery, the COVID epidemic has reinforced our support of a system rooted in convenience, access, and customized service. Millions of Americans now have access to extremely high grade cannabis products without ever leaving their homes. 

 

San Francisco has dozens of delivery services to choose from, with the highest concentration of cannabis delivery orders nationwide. And not only third party delivery services have become commonplace in the industry; many licensed local stores like Basa or Medithrive even offer their own delivery.

 

Cannabis consumers use many parameters to refine their cannabis delivery search, and it’s important to consider what aspects of the service are most important to their experience. Cannabis businesses that leverage delivery have an opportunity to enrich the user experience from browsing to point of sale to customer doorsteps.

 

Businesses vary on operating hours, prices, delivery times, minimum orders, service areas, menu selection, and degree of customer service. Some dispensaries push for a tailored e-commerce experience, with consultation and geographical coverage on the forefront. But what about delivery times? Can longer wait times, larger distances to cover, or next-day delivery be deal breakers? With so many factors in the filter, what aspects of delivery are most important to customers?


Let’s take a look at ticket sizes and delivery times in the San Francisco Bay Area (a concentrated market for cannabis delivery in the US) across both on-demand and scheduled orders.

Covid-19: Delivery Booming

 

It may come as no surprise that sheltering in place has pushed delivery as a primary mode of purchase for cannabis consumers. Ticket sizes in March 2020 have more than doubled on average compared to orders made this time last year in the Bay Area.

When it comes to retaining delivery customers, simply getting it to the customer faster doesn’t necessarily mean they will be higher retained. On average, most customers in the Bay Area receive their cannabis 1-2 hours after placing an order. 


What we find is customers who get delivered faster, i.e. in less than an hour, actually don’t repeat purchases as often as customers who get delivery after an hour. They order at a lower overall frequency (orders per year) and have a lower retention rate. 


Now this may be heavily influenced by geography. Customers who are in denser areas who may be experiencing faster delivery times could have more options to choose from, leading them to optimize for delivery time increases across multiple providers.


Comparing across the Bay Area, we can see that less densely populated areas have longer delivery times (as expected).


But those same less densely populated areas are shaded lighter when looking at retention, meaning they actually retain more customers than more densely populated areas, implying the causal factor may not be delivery times, but availability of cannabis options.


 However this isn’t entirely born out in the data. When we look at where Weedmaps locations are advertised (deliveries and storefronts), we find that areas with a smaller population still have a large volume of advertised locations. Silicon Valley, for example, (area in the southwest of the map) has low retention, short delivery times, but a lower volume of Weedmaps pins.


Another influencing factor not reflected in the data is that many customers in the cannabis industry are new to the industry, whether due to recent legalization or limited advertising on cannabis products. When customers are new and lean on dispensary recommendations, customer reviews, and other suggested products, they may be more forgiving when it comes to delivery times. 

 

One thing is for sure- delivery services give cannabis businesses the power to more directly access customers, whether that be through retaining regulars, introducing new products, or simply making orders more convenient.

 

For more information on how you can increase your ROI, retain regular customers, and personalize your customer experience, reach out to Happy Cabbage at insights@happycabbage.io


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