Discount Driven: Why Cannabis Needs Its ‘Prime Day’
“Prime Day is a celebration of our Prime members, and we’re excited to bring members great deals across an incredible selection, whether members want to shop and save on top brands, buzzworthy items, or small business collections,” — Jamil Ghani, vice president of Amazon Prime.
Unless you are living under a rock, or maybe just don’t shop at Amazon, you’re probably aware that 2021’s Prime Day is right around the corner. A massive event for the retail organization that goes beyond sales of products and now includes special events designed to highlight the breadth of Amazon services, like broadcast concerts with Billie Eilish and the moon man himself Kid Cudi.
Amazon Prime Day is big. So big in fact it drove an estimated $10.4B in global sales in 2020. To give you a sense of its scale, that’s just under the total sales of cannabis flower in the U.S. for 2021.
Discounting and promotional strategies are nothing new to the cannabis industry. Since the beginning of legal cannabis medical dispensaries were known to run promotions like ‘Free Pre-Roll for First Time Members’. 4/20 which now is synonymous with special promotions, not dissimilar from a Black Friday in the traditional consumer goods world. As the industry matures, so does the opportunity for promotions and there are a lot of parallels between large scale, vertically integrated retail operators and what Amazon is doing — well, maybe without the music streaming.
The Evolution of Prime Day
Customer loyalty was at the core of Amazon Prime Day, but it has since evolved to Amazon’s other ambitions from to promoting its own product lines to its subscription services.
Loyalty First
It can be hard to remember the earliest days of e-commerce, when consumers were hesitant to use their credit card online, and shipping fees and delivery times were a burden. Amazon launched its Prime program in 2005 as a means to make it easier for customers to purchase products online, with free two-day shipping for a small fee which proved revolutionary. Since its introduction the program has been wildly successful, with an estimated 100 million Amazon prime members with a retention rate of 93% retention rate.
From 2015 to Today
Ten years later, Prime Day launches with a focus on continued adoption of Prime memberships and providing existing members with a broad set of exclusive discounts. Over the years Prime Day has evolved from simply driving loyalty to now driving sales of its private label product like Amazon Basics or its own hardware like the Kindle and Echo devices. This year, Amazon is putting a large emphasis on its small business and third-party sellers, trying to attract even more retailers to the platform.
Loyalty, Promotions and Cannabis
Amazon Prime is Amazon’s own Black Friday, a massive calendar shopping date for U.S. retail. In cannabis, 4/20 or Green Wednesday (the day before Thanksgiving) have evolved to be calendar dates where every retailer participates in some form of promotion. But cannabis retailers go beyond these calendar events, and leverage loyalty and custom promotions throughout the calendar year to drive adoption.
Cannabis Customer Retention Through Loyalty
Service providers like Springbig enable cannabis retailers and dispensaries to deploy loyalty programs at scale. In similar ways that Amazon provides personalized shopping through its recommender systems, cannabis retailers can take advantage of technologies like Springbig in conjunction with Headset analytics to create smart campaigns around target customer segments. These types of services provide some of the building blocks for running comprehensive promotions like Prime Day.
Discounting, Markdowns and Promotional Campaigns
Another tool that cannabis retailers leverage, like any traditional retailer are discounting, markdowns and promotional campaigns. A look at the data shows that discounting works, driving larger transactions for retailers. For example, a look at Washington state cannabis sales data, Headset found that as baskets get larger the percentage of non-discounted items get smaller going from 83.2% to 17%. Disciplined efforts around creating efficient pricing and promotional campaigns will continue to drive success for these retailers.
How Cannabis Can Have Its Prime Day
It is time for cannabis to have its own Prime Day. The tools and technologies are there, one-off retail promotional campaigns exist and now a number of operators have the scale required to do something across multiple states of the size and scale to really get noticed. The benefits enable cannabis operators to achieve the same goals that Amazon does with its promotion:
- Getting more customers into valuable loyalty programs
- Driving sales and promotions of owned cannabis CPG brands, private label products and/or house brands
- Promoting other products and brands beyond private label
- Boosting overall sales
- Driving awareness and media attention
Combine all of this with a promotional concert, something that the cannabis industry has plenty of experience with, and we’re set!
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