🤯 "Headless" eCommerce

As the US cannabis industry found firm footing over the last two or three years, we’ve seen a trend from simplistic to complex:

• The first wave of MSOs had a simplistic goal: raise lots of money and scale as fast as possible. Broad strokes, it did not work. Now, successful MSOs (Jushi, Verano, GTI, etc.) are seeing much more success with deliberate, thoughtful growth - which is necessarily more complex. They think about supply chain, they think about brands, they think about digital experience, they think about sophisticated retail process flow, they think about data

• Form factors exploded. Flower is top of mind for any new legal market, and dominates share as a category. Simple. As markets evolve, and we welcome the ‘long tail’ consumer that has never experienced cannabis, we see a more complex product set: vapes, edibles, tinctures, topicals, suppositories, etc.

• Technology is growing up. Originally, you could do pretty well throwing up a pin on Weedmaps and calling it a day. Simple. Now, you must make smart decisions on what technology you use, as your POS must speak to your eComm must speak to your fleet management must speak to your loyalty provider…you get the point

This trend toward complexity is not happenstance - the industry takes one step, gets comfy, then takes another. Nowhere is the trend more evident than in eCommerce, which experienced a historic boom since COVID locked people away back in March of 2020.

🎸 G Chord Before Shredding

As an industry, we have spent the last several years learning the basics of eCommerce.

The first thing we learned - our G chord - was the following:

You might be laughing at the duh-ness of that statement, but, in some markets, I still have healthy debates about the value of having an online menu at all.

For a vivid example - if you are a retailer in Illinois, and you do not have an online menu collecting orders from eComm shoppers, you are missing out on about $500k in sales per month.

The next thing we learned - our first Green Day song - was the following:

This means automating images, descriptions, meta tags, etc. This means making sure that when you enter something into your POS, it shows up beautifully on your menu. This means avoiding hiring two full-time staffers to right-click images and save-as them onto your website.

For a vivid example - many retailers, if they do not have an automated solution, spend 20+ hours per week updating menus. 20!

The next thing we learned - maybe a Beatles tune - was:

This means that digital shoppers don’t care about your problems - they want to shop for their vape carts like they shop for a phillips head at Home Depot or a vanilla candle at Target. Show me things I can buy, where I can buy it, and how I can get it (delivery / BOPIS / curbside).

For a vivid example - Nevada’s curbside fulfillment grew from 0% of fulfillment mix (pre-COVID) to 42% (last month).

☔️ Purple Rain

Now, today, here we are - most operators can play some songs from Abbey Road. We have a hefty percentage of the retail population that have embraced an eCommerce partner of some kind. They are populating menus and receiving orders.

We’re all comfy.

But, ladies and gents and everything between, there is a next step. And that step is:

To play like Prince is to:

Now we’re talkin’ headless eCommerce.

👶 Explain it like I’m 5

There are two parts to your eCommerce environment:

1. The Front-end. Aka your customer interface or the ‘head.’ This is what customers see when they shop

2. The Back-end. Aka the complicated stuff that reads your POS, pulls in all your settings (hours, fulfillment, taxes, specials, delivery settings, etc.), manages content, etc.

Headless eCommerce is when your customer interface is decoupled from the complicated tech logic on the back-end - it means that you can rely on API calls to populate your front-end, so it can be 100% custom to your brand.

In even simpler terms - it means you can change the look and feel of your menu, while keeping the complicated stuff.

🤷🏻‍♂️ Why would I want that?

Well, you might not. Today, there is a pretty narrow set of retailers that can pull this off. Consider the following:

“Traditional” eCommerce (e.g. a white label Jane menu) can accommodate and turbo-charge 90% of use cases. For the other 10% of our operators - the well-funded ones with technical prowess and who are obsessed with branding - headless might be a good choice.

As we roll out headless functionality with some of our top tier partners, we’ll know more about potential pitfalls. The biggest unknown, IMO, is the impact on conversion rate. Menus are set up in a certain way to maximize conversion (the % of visitors that place an order), and we relentlessly test feature updates against this North Star number. What happens when you start building on top of APIs and making your menu look as funky as you want? Will conversion suffer? Will it improve? Remains to be seen.

📚 tl: dr

• Cannabis is on a trajectory from simple to complex

• G chord: You need eCommerce

• Simple Green Day song: You need it to be automated

• Beatles: Customers want to shop for cannabis like they shop for everything else

• Prince: fully-customizable “headless” eCommerce

• Headless eCommerce is the decoupling of your front-end (your menu, aka the “head”) from your back-end infrastructure (usually provided by a 3rd party partner), and it allows 100% customization

• It is Wednesday