Dutchie, the Bend, Oregon-based company is a cannabis tech startup that was founded to help dispensaries create and run their websites, process their orders, and track what needs to be prepared for pick up in a model similar to that of Shopify.
Founded almost five years ago, Dutchie has attracted a series of funding with a great promise of growth based on the increasing number of states legalizing cannabis in the United States.
Dutchie is backed by some renowned personalities, such as Kevin Durant, Howard Schultz, and Snoop Dogg, the company was founded by Ross Lipson. Today, Dutchie claims more than 40% of the market share with a valuation of $3.8 billion.
Within the first month of its establishment, 50 dispensaries in Oregon had already signed up to use Dutchie’s eCommerce platform. The eCommerce platform has become a hit with many dispensaries who prefer to use Dutchie’s software.
Despite its growing popularity backed by the huge investments from venture capitalists, some dispensaries have kept off the platform and instead chosen to go it alone. So, when is it the right time to use a platform like Dutchie or when is it not?
Dutchie sells e-commerce and point-of-sale (PoS) software to dispensaries to help the latter take online orders, manage inventory and state law compliance and run their cash register.
The platform works just like Shopify, as it sells its software products on a subscription model. The fee ranges from $500 to $1,000 per dispensary per month.
With over 9,000 dispensaries operating in the United States and Canada, Dutchie claims to have more than half (5,000) dispensaries using its software.
The popularity of e-commerce platforms such as Dutchie is not in question, as online ordering of cannabis products has been on the rise in states that have legalized recreational and medical marijuana in the United States.
These platforms offer important online tools that allow dispensaries to reach wider markets. Dutchie is great for adding a menu to a dispensary website and allowing wider market reach for even the smallest of dispensaries.
In nutshell, Dutchie offers the functions and features that make it easy for dispensaries to reach a wider market across states.
Moreover, they are easy to use and affordable. The online presence is a way for dispensaries to market and advertise.
The tools work to improve your marketing efforts, which leads to high conversion rates, fast and knowledgeable customer service, excellent compliance features, and a refined user experience.
The platforms also offer a massive library of product information and images and insights about how to produce sales.
As a third-party cannabis marketplace, there are both positives and negatives associated with using the platform as a dispensary owner.
First, these platforms come at a cost of losing a direct relationship with the customer. This has been seen in other industries where big tech companies like Amazon are only looking out for themselves.
In all fairness, platforms like Dutchie can initially help you set up your online business quickly. However, in the end, they will steal your patrons, which may put your business at risk.
The power of a business is in its ability to own its customer relationship, something that platforms like Dutchie will take away from you. If you allow your dispensary website to aggregate Dutchie software, you’re able to sell more products online by having access to wider market reach and more marketing tools. However, the process will cost you your customers as they become loyal to the third-party platform that they interact with rather than your own platform. The risk is that you’re likely to lose your business and brand visibility in the long term if you don’t own your customers directly through your own cannabis e-commerce website.
Your dispensary data is one of the most important components of a company. Companies like Dutchie and others take control of your dispensary data, which can compromise your brand value and customer relationship. That is, using these third-party platforms means you do not own any customer data. This data can be sold to a competitor at your expense or can be used to bypass you as the platform builds a direct relationship with your customers. Moreover, as an all-in-one platform, Dutchie does not give you room to innovate as you will rely on its tools all the time.
While eCommerce platforms such as Dutchie may offer great opportunities for starting and building a dispensary for your cannabis business, it has their drawbacks especially if you want to grow better in the long term.
Dutchie may be good for your cannabis business in the short term, but if you want to grow in the long term and succeed in the eCommerce space, it’s important you avoid these all-in-one tech platforms. Instead, build your cannabis eCommerce platform in-house.