Back in February, Shopify inked a deal with the Ontario government to become the exclusive online platform for Ontario Cannabis Stores (OCS). Vice President Loren Padelford attended the World Cannabis Congress yesterday to speak about cannabis and eCommerce.
During his presentation, Padelford stressed the importance of having a good user experience on your online cannabis store. "Good retail isn't about selling people something," he said. Experiences are what's important, if the consumer has a bad time they aren't likely to come back.
"Really think about the first time user. Don't design for the super-users, it's a mistake I see stores make all the time."
When asked to give three pieces of advice Padelford said stores should be simple and easy to navigate, geared towards guiding new customers through the experience, not setting up roadblocks. Education needs to be part of this as well. He stated the importance of education. You want to help teach first time customers how to navigate your market in an engaging fashion. And finally, always have product in stock.
"The biggest mistake, challenge that will exist very early is stock-out. If you have empty shelves, or an empty online store this will be a problem."
When you spoke a little bit about like the ‘retail apocalypse,’ and not the death of retail but the death of bad retail, how important is that going to be to incoming cannabis entrepreneurs?
It's the same, right? It's primarily because consumers have just been trained to avoid bad retail experiences now. At the start—because in a lot of cases like if you look around the provinces you have you know provincially controlled experiences and then you know distributed experiences—this will be more important in the distributed experiences right off the bat. Because in somewhere like, say, Ontario you really have no other option. Whether you like the experience or not the only place to get it is OCS. Whereas if you're in Saskatchewan or Manitoba you're gonna have a lot of options, a lot of retailers. So, where you have a distributed model the experience is really critical, but it's really critical regardless consumers are fickle. If it's a bad experience their likelihood of returning is low. And so in a market that you're trying to get out of a black market into a white market, if that experience is bad they'll just go back to the black market where it was good, and so this will fail to deliver its mandate which is the reduction of the black market. So I think it's really critical, as it is for any retailer, but especially when you're trying to take an established set of folks off of what they're used to.
With the addition of the very strict and restricted branding policies around cannabis products what are entrepreneurs going to be able to do with their web platforms to create a brand?
I think that this is going to create an initial set of challenges that people are gonna have to be really creative around, which is you know how do you establish a rapport and a brand when a lot of what you're being asked to do is highly controlled. The positive side of this is: to make this industry safe, and to make it something that society can absorb, being restrictive right off the bat is probably the better approach. Because the average person wants safety more than they want branding right off the top. Branding comes over time, after you're sure that you're gonna get, you know, a good product or a safe product or whatever it is. So, I think that this direction makes a lot of sense in how do you get society to adopt a brand new experience. But it also creates a need for the retailer's themselves—and the producers to be creative. A lot of it is going to be experience. It's like, what does the buying experience look like, and feel like. Not necessarily the product packaging that it comes in. Because you can create that emotional attachment to the brand through better experience that is irrelevant to the packaging. So I think it's going to test creativity of all of the producers to see what can they do within the bounds of legalization that makes a customer like them more than someone else that isn't so obvious as branding.
Do you see this as weeding out some of those producers that are focusing on stoner stereotypes?
Look, I mean, I think markets are broad. And so there's gonna be brands that are attractive to all different types of markets. I think this will have a levelling effect. You're gonna have to perform as a brand at a higher level than maybe you had to before, and so that's gonna push a lot of brands to the edge. Whether it leads them out or not is a good question. I think you can look at natural retail markets, as retail has always been survival of the fittest. Whoever does the best job wins and that's what the retail apocalypse is —just because you were the biggest and you had the most stores didn't mean you were gonna win the war. So I think we'll see the same thing as this market develops over time. Those who do a better job of customer engagement, customer interaction will win because that's what customers want. Packaging alone won't save you from anything.
When you speak of this being sort of levelling industry what is Shopify doing as a platform to create opportunities for people, frankly, who aren't white middle-class men?
I think Shopify was founded on, and is still fundamentally, an a platform for entrepreneurs. Entrepreneurs of all shapes and sizes, and I mentioned in my talk that the fastest growing group of entrepreneurs on Shopify is women over the age of 50. And predominantly Shopify is a women-driven platform. That's because we're as a platform somewhat agnostic. What we're trying to do is give anybody the same level of power and capability that was reserved exclusively for the biggest companies in the world until we came along. And so what that does is naturally level the playing field. It says "it doesn't matter if you have lots of money or a little bit of money you all get the same car to start with and so now it's who's a better driver." I think that what we've seen is it allows entrepreneurs at all levels to embrace the platform. To use it to express their own creativity, and their own desires, and that's really giving traditionally underrepresented groups a lot more access, and a fair fight because they have the same capability as anybody else.
Can you speak a bit about what you're doing to help Canadian retailers reach international markets?
I think our platform itself is built to allow entrepreneurs, and merchants, and retailers to start up and then go global as they see fit. Whether you're a Canadian retailer trying to reach a broader market or you’re a broader market trying to reach the Canadian market, what we give you is the toolset that says, ‘should you want to launch a store in the United States or in France or in China you can do that using the Shopify platform relatively easily.’ And so that gives the choice back to the merchants who traditionally have been very hard and very costly, they can very quickly now say, ‘Hey, I want to take this from a local brand to a national brand to a global brand,’ and they can do that pretty seamlessly just using the box functionality
Is there any future for other Shopify tools—specifically I'm thinking of things like Frenzy—in the cannabis market?
Ultimately the way the customers use our platform is dictated by their own needs. But also, in this space, is going to be dictated by law. Should the opportunity arise that cannabis retailers can do, you know, geo-fenced limited product drops, Frenzy will be a great tool for that. As far as I understand our legislation that won't be allowed anytime soon. But our approaches to give retailers a very big tool chest of things they can do to engage their customers. Whether that's Frenzy, or Arrive [a shipment tracking app], or Launchpad [sales automation service], or point-of-sale and technology we're out there trying to make it easier for retailers to grow and engage customers. As cannabis develops as a market and is allowed to do more of that, what I'll call cutting-edge retail experience stuff, we’ll be right there helping them do it.