Article by Kate Robertson, Growth Op
Is Ontario’s struggling weed store gaining a new, loyal customer base among stoners in lockdown?
The provincial cannabis store lost $42 million in its first fiscal year, but online sales skyrocketed in the weeks after the World Health Organization declared COVID-19 a pandemic. As Canadian public health authorities implemented increasingly strict physical distancing measures in an effort to contain the virus, many of us were motivated to hunker down at home and stockpile essential supplies — which, according to figures released today, included a lot of cannabis.
Leading up to March 9, the OCS handled an average of 2,500 to 3,500 online orders per day. But in a series of sharp increases over the course of the last five weeks, that number grew to 5,000 — and ballooned again to 13,000 daily orders in early April, according to data provided to The GrowthOp.
“We’ve had to rise to the challenge,” said Cheri Mara, chief commercial officer at the OCS, in a phone interview. “But our team tends to get very energized by a challenge, so when we started to see customers’ needs change, we rose to the challenge. There’s a lot of less-than-happy news right now, but the team and the energy is really quite positive.”
The first increase in orders came on March 14 and 15 — following Sophie Trudeau and Hollywood A-listers Tom Hanks and Rita Wilson confirming they had contracted coronavirus. It was also after schools closed for an extended March Break, but before the premier declared a state of emergency in the province on March 17.
There was another sharp increase about a week later — the same time Prime Minister Justin Trudeau’s tone grew more serious: “Enough is enough. Go home and stay home,” he said at that day’s press conference. At that time, conversations first arose about whether or not cannabis would be considered an essential service.
But the steepest spike came from April 2 to 3, which is also when brick-and-mortar cannabis stores, which are privately owned but supplied by the OCS, were ordered to close. (That closure was temporary, and stores have reopened with curbside and delivery services with support from the Ontario Cannabis Store.)
Most excitingly for Mara’s OCS team is more than 30 per cent of orders came from new customers. On top of that, more than half of these new customers have already made subsequent buys, Mara said.
When it comes to what people are buying, there are two stand-outs.
Bulk and discount products, like the 28-gram bulk dry flower deal at $4.20/gram by Pure Sunfarms, are in high demand. As a result of this and in response to customer feedback, the OCS has reduced prices on more than 240 products.
“The other area of the business that we’re really excited about is in the edible category,” Mara said. “New customers are driving toward edibles, and we’re seeing a lot of movement in chocolate, there are some wonderful offerings in that category. Tea bags are moving really well, and chewables.”
Mara said customers aren’t necessarily spending more money — that number is staying fairly consistent — but people are buying larger sizes of products and adding edibles to the mix more often.