Green Wednesday and its expected sales spike is just a week away. However, data suggests the cannabis industry’s Black Friday equivalent may be more about timing shifts than actual sales growth, with deeper discounts eating into profits.
Sales data suggests consumers are simply shifting their regular weekend purchases to earlier in the holiday week rather than increasing overall spending. Roy Bingham, co-founder and CEO of analytics firm BDSA, told GMR that last year‘s sales were 72% higher than an average day, with flower products representing 39.5% of revenue, followed by vapes at 23.7% and pre-rolls at 16.9%.
However, Black Friday looks more like a typical sales day, just with steeper discounts, according to data from Seattle-based Headset. The firm reported that average discounts increased from 17.3% on typical Wednesdays to 24.4% during the holiday, before reaching 25.9% on Black Friday.
“Most people are doing their shopping on Wednesday anyway; Black Friday looks like kind of a typical Friday over the last couple years,” said Mitchell Laferla, an analyst at Headset. “Whereas Green Wednesday, that’s that 50% spike (in total sales) that you really want.”
The sales surge also reveals distinct holiday shopping patterns. Beverages emerged as last year’s surprise winner with a 10.5% sales increase during the holiday weekend, while traditional flower sales plunged 14.6%, according to Headset. Edibles and topicals each posted 3.1% gains.
“My suspicion, though I wouldn’t be able to prove it with data necessarily, is people kind of like the discrete method of, like, hey, they’re meeting up with family but they maybe want to take an edible on the side,” Laferla said.
While sales do increase on Green Wednesday, there’s also increased competition for market share, so marketing – particularly digital marketing – has become increasingly important.
But cannabis marketers face their own hurdles. Major platforms like Facebook and Google maintain strict bans on cannabis advertising, forcing companies to get creative with their digital strategy.
“The elements of the creative have to be fairly benign,” said Jonathan Mellinger, president of cannabis advertising firm Brkthru, noting even approved content sometimes faces publisher pushback. Landing pages pose another hurdle, with campaigns often delayed if pages don’t meet platform guidelines.
Brkthru, which handles campaigns for U.S. dispensary operators, has developed relationships with various exchanges and publishers willing to run cannabis ads, which helps with pushing out the message, but getting the consumer to pay attention is its own challenge.
“Scale matters because you’re in a market where you can probably hit me with a bunch of emails for a certain brand, but if it ain’t my brand, I’m not gonna budge,” Mellenger said.
Discounts can help break down that wall, but it’s not always the right answer. Large operators might be able to absorb holiday discounting, but its harder for smaller dispensaries that face growing pressure to compete. The challenge is balancing aggressive discounting with sustainable margins.
For brands still looking to capitalize on the holiday rush, there’s still time to get the message out.
“If someone came to us today, we would probably be able to turn around a campaign for them and get it launched by Tuesday or Wednesday,” Mellinger said. He added that the firm has private marketplace deals set up with various exchanges that accept cannabis advertising.
He noted that the holiday rush speaks to cannabis retail’s evolution toward mainstream practices – albeit with unique advantages.
“Eighteen percent converting after two views is really good for any industry,” Mellinger said. “The sales cycle is shorter and while brand affinity still exists, you can get a quicker response in the cannabis marketplace with digital advertising – even if you’re squeezing margins to get there.”
Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at adam.jackson@crain.com.
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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis
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Crain Communications Inc © 2017 – . All rights reserved.