How This Food-Delivery Entrepreneur Pivoted to Cannabis-Delivery
This story appears in the March 2019 issue of Entrepreneur. Subscribe »
Cannabis had just been legalized for recreational use in Oregon, so I and everyone else in my town lined up, sometimes for an hour, outside the busy dispensaries. When I finally got to the counter, I had mere minutes to read the menu and even less time to discuss it with the budtender and make an informed decision. It was a terrible customer experience.
That’s when it hit me: What if I could just go online, educate myself about the products available at each dispensary, determine which was right for me, click a button, and have them delivered straight to my home?
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The concept wasn’t completely random. In my previous life, I ran and sold two online food-ordering companies. The first I helped start in college, after I noticed how much time students wasted looking through stacks of paper menus and calling restaurants for delivery. After graduating, I discovered there were no online food-delivery businesses in Canada, so my partner and I created GrubCanada, scaled it from coast to coast, and sold it to Just Eat in 2012.
Now I live in Bend, Oreg., where I ran my idea by my brother. He hates 99.9 percent of the stuff I pitch him, but he said, “You have to do this.” So he joined as my CPO. We named the company Dutchie (slang for “joint”) and got to work applying the same ideas that we would in online food ordering.
We soon learned that the cannabis business was a different beast. It would require some creative rethinking.
At first, we stuck with what we knew: We built a system that looks a lot like a restaurant delivery service. Customers can shop on our platform, and then a dispensary receives the customer’s order and is responsible for delivering the product. But as soon as we launched, we ran into a big problem. Dispensaries may sell up to 1,000 products, always get new products in, and run out of stock all the time -- which means their inventory is constantly changing. This is the opposite of the restaurant business, where menus stay the same. When was the last time you ordered from Domino’s and were told they ran out of pepperoni pizza?
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We quickly got calls from frustrated dispensaries that were getting orders for sold-out products, and from angry customers who’d ordered something that wasn’t available. It was devastating -- I thought we might have to shut down. Then we came up with a solution. We integrated our software with major POS systems, so when a dispensary added or sold out of a product, Dutchie updated automatically.
One crisis solved, but soon there were others. In my former businesses, we used Google AdWords, Instagram, and Facebook to market, which you can’t do with cannabis. We had to get the word out, but how? One thing I learned from the food-ordering business is that when a customer uses your service, it’s easier to get them to order again than it is to get somebody new to order. We needed to encourage repeat business.
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That’s why we got creative with customer service. When somebody orders from Dutchie for the first time, we surprise them a week later with an appreciation package in the mail. Inside is a handwritten thank-you note, some Dutchie swag, and a pair of custom Dutchie slippers. Our message is: Relax and let the dispensary come to you, or order for pickup. That personal touch builds brand loyalty and creates word of mouth.
Dutchie is now in more than 250 stores across nine states. If I could share one takeaway for those considering jumping into the cannabis business, it would be to stay in your lane. If you become a master at something, no matter what business it is, then stick to that expertise. For me, it was online ordering. I’m still in online ordering today. I’ve switched my focus to cannabis because I saw an opportunity, but at the core of what we’re doing -- our operation, our logistics, our software, our team -- it’s the same as helping you order a pepperoni pizza.
