By Max Goldstein, co-founder and partner at OpenNest Labs.
A few weeks ago, Union Electric became one of the first cannabis brands in the state of California to offer direct-to-consumer (DTC) delivery with next-day drop-off across major metro areas.
We executed our DTC launch in partnership with Flower Co., a members-only e-commerce platform that recently started white-labeling their fulfillment and delivery services. The partnership enables Union Electric to:
1) offer competitive prices on top-shelf greenhouse flower, while capturing a significantly larger portion of the retail price; and
2) establish relationships directly with customers by capturing orders on our website, enabling long-term enterprise value and defensibility of the company.
Flower Co. is the first service provider to allow brands to take orders from statewide customers and in turn fulfill those orders. Until this service offering, the regulated cannabis industry has forced non-vertically integrated brands to operate through a myriad of cultivation, manufacturing, distribution and dispensary operators, each taking a significant cut of the retail price and playing gatekeeper between brand and customer. While some cannabis brands have established customer loyalty and recognition this way, it’s challenging to grow the lifetime value of a customer when a budtender or delivery service holds the key to the customer relationship.