Imagine a cannabis dispensary with thousands of products protruding from every shelf and dangling from the ceiling. Of course, that doesn’t look like a nice and convenient shopping experience for any customer.
Now picture another cannabis store with many empty shelves and just a few products to pick from. This is not a favourable customer experience either, given that there are tons of diverse cannabis products in the market.
Somewhere between these two contrasting scenarios is the perfect product array and shopping experience. Retail inventory selection in the regulated cannabis market has become a challenging task. Retailers typically grapple with the following questions: What products do I stock? How do I find the right product mix for my customers? How do I reduce the investment tied up in inventory to boost cash flow?
Well, here are five strategies to help you navigate the world of cannabis product assortment and inventory.
Right Mix of Products
Inventory represents all the products, goods, or merchandise stocked by a business to sell to customers. In the cannabis space, inventory refers to cannabis products like edibles and vapes. It could also include accessories like a grinder and rolling paper and branded merchandise such as t-shirts, hats, and face masks.
As a cannabis retailer, you should offer not only what you like but also what your customers want. Thus, you need to think about creating the perfect mix of product categories. Flower products are still in high demand. But consumers are increasingly searching for other cannabis consumption methods. This includes topicals, edibles, tinctures, vapes, and other product types.
You should always keep track of best-selling products and make sure they are adequately stocked. If a customer asks for a product that’s not in stock, take note and decide whether it’s suitable to add to your product line. By keeping tabs on trending tastes, you can adjust your product catalog accordingly to get the most out of the opportunity to make sales.
Different Price Points
You need to have a variety of price points within the different product categories. Clearly, consumers have different budgets and product preferences. Assume your customers ask for $30 edible options, but you have priced all your edibles from $40-$60. In this case, you may lose out on the sale because you lack the price points that your customers are searching for.
Having different price points for different products will help attract a larger customer base. Moreover, new consumers may be hesitant to spend big on their first weed product. By stocking some low-priced products, novice cannabis users can try something new without spending a lot. If their experience turns out to be great, they are likely to spend more and inquire about your other product offerings.
With everyone buying the same product, you’re likely to end up in a price-matching war that you will never win. And so, you need to stand out from the rest by working on your product menu.
As a small cannabis store, your product line should comprise niche cannabis products that larger chain stores don’t have and your customers want. In general, large chain outlets may not want to purchase a product with limited availability. That’s because they can’t stock it at all their retail outlets. Therefore, stocking such limited-availability cannabis products will help make your independent store stand out from the crowd.
Achieving Adequate Stock
Now that you’ve decided what products to carry, the next step is determining how much of each product you should actually stock. By stocking fewer product units, you may run out of stock too quickly, resulting in a loss of revenue from missed sales.
Equally, stocking too much of a product may lock up funds in inventory, resulting in cash flow challenges. And overstocking increases the time it takes to conduct inventory audits. It also increases the possibility of product loss without your knowledge.
The idea is to have just enough in stock but not in excess. To achieve this, consider having sufficient days’ worth of stock that you can reorder on your normal timeline.
For example, let’s assume your 1-pack of gummies sells around 10 units per day. If you know that it takes two weeks for the gummies to restock from the vendor (lead time), you should order product units to last 22 days, or simply 220 units of 1-pack gummies. That way, when you reorder the following week, you can be sure you have adequate inventory to cover the two weeks that it takes to get the units on your shelf.
This might sound complex because of the crunching numbers. To help you with your purchase orders, consider cannabis inventory software. The technology can let you know what product to reorder, when, and the volume by analyzing your historical data to forecast future demand.
Product Bundling Concept
The diversity of product offerings is part of the attraction of cannabis dispensaries. You’ve already spent a significant amount of time choosing products that will appease existing customers and entice new ones.
Now the next step is to think about product sales. The concept of product bundling offers considerable value and an opportunity for your customers to buy their preferred products accompanied by something fresh and exciting.
Here is how product bundling works: The majority of shoppers enter a store with a particular budget or product in mind. Combining two or more products offers them a specialty variety that they may have ignored when just buying a single product. This sort of product pricing strategy means you’ll make sales for equally purposeful and impulsive buys.
It is important to diversify your bundles. For example, combine rolling paper with your best-selling strains in a time-limited promotion package. Make sure the bundled products share comparable attributes or complement each other. This allows your customers to try and fall in love with new items they may not have usually picked.
After all, product bundles at bargain prices have an audience and will convert potential customers into buyers. It is also faster to process a bundle transaction than to ring up multiple items.
The Bottom Line
Retail product selection and inventory is never an easy task, especially for cannabis retailers. As discussed above, it is important to pick the right balance of product categories that your customers want.
You should also give your customers different price points and avoid having too little or too much stock. Once you figure out that sweet spot, your dispensary should continuously update its product line to match supply and demand.