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The Kaya Cast podcast is a weekly show where we interview thought leaders in the cannabis industry about their experience and expertise of working with cannabis. The aim of the show is to help cannabis retailers do what they love and share their stories.
Intro: [00:00:00] Welcome to the KayaCast, the podcast for cannabis businesses looking to launch, grow, and scale their operations. Each week, we bring you interviews with industry experts and successful retailers, plus practical tips and strategies to help you succeed in the fast growing cannabis industry.
Tommy: Hey, everyone. In this episode, we are joined by John Ucciferri. The. VP of marketing at trees. As a business owner time is your most precious resource trees helped entrepreneurs understand what areas of the business requires attention. Through their role plus reporting and analytics in this episode. John gives us advice on what data points a dispensary owner should look at. When trying to increase sales. This is a good one. I hope you guys enjoy.
Alright, well thank you John for joining us today.
John Ucciferri: Thank you. Appreciate it. Good to be here.
Tommy: What data points a retailer should [00:01:00] look at in improving their business operations?
John Ucciferri: For retail operators is product assortment, inventory management,
inventory optimization. Um, our main KPI, which is actually a tree specific KPI is called sellable velocity. So everyone's probably familiar with sell-through rate and sales velocity. Sellable velocity takes it a step further where not only are you measuring how quickly your products are selling, but in cannabis. You wanna measure how quickly it's selling once it's in a sellable location, and that's a very different measurement than if it's just part of your inventory. If it's in the back, you wanna actually measure how quickly is it selling or not selling, if it's on the sales floor ready to be sold. And that gives a level deeper visibility for the operator and it helps 'em make much better decisions. Product assortment is, is the probably the key thing that operators are trying to figure out in cannabis, right? [00:02:00] We're still in a very new, new industry, um, with not a lot of standard practices. We're all building together, but ra retail analytics is really meant for retailers to look at their inventory data.
What's selling, what's not selling? What do I need to get off the shelf if they're, if it's not selling, can I discount it? Do discounting. Don't discount everything, but maybe the stuff that's not selling and really try to optimize my inventory
Tommy: You made a really good point, an interesting point, sellable velocity. Can you talk a little bit about the differences and the nuances between having inventory in the back
John Ucciferri: right.
Tommy: and measuring how, how long you hold inventory to actual sellable inventory?
John Ucciferri: Yeah, so I mean, in cannabis, which, you know, maybe, maybe it's a little different than traditional retail in this sense, but you have your inventory in the back, you have your inventory that you actually move into a sellable location, right? And so if you're just measuring what's in your [00:03:00] inventory, you're only looking at the total pool of inventory that can be sold. but if you're looking at actually the inventory that is on the floor ready to be sold, then you get that level deeper of like, okay, well if that, if I can get my sellable velocity quicker, then I can actually affect all my inventory in the back. I can get it to, to the point where I'm going through my inventory quicker. If I can see what's selling and what's not selling in the sellable location. If I'm just looking at what's in the back, you're looking at a very long. Elongated view on what is selling and what's not selling. You wanna be able to look at what I can actually sell. And until it's moved to that sellable location, you're not effectively looking at your, your real pool of sellable inventory.
And that's, that measurement is really key for, for operators, regardless of that nomenclature. Just having the data to see what's selling and not selling and how to optimize off of that, how to price differently, [00:04:00] how to discount differently. These are all the things that retail analytics allows you to do.
Tommy: So how would somebody use sellable velocity to impact sales or impact their cash conversion cycle?
John Ucciferri: Yeah, so simply by looking at what products and what their sellable velocity is, right? How quickly are they selling? You could say, I need to restock on this flour, or this gummy or this product. Very, very soon. I could see how quickly it's gonna sell out. Okay? I'm looking at a product that has a very long sellable velocity or sales cycle, then I know I need to get it off the shelf quicker, so I need to do some smart things.
By doing that, you're optimizing, you know, your current inventory, but it also allows you to say, well, these products are not really selling at the velocity I need them to sell, so maybe [00:05:00] I won't buy as much, or maybe I won't buy at all, but these are the products that are consistently selling my top. Items and I need them to be in stock at all times.
I need to be in, be in a sellable location at all times. And if you're only, again, looking at your total pool of inventory, then you're not really optimizing for your, your shelf space. You're only optimizing for your total pool of inventory. And that really is important for cash, cash flow, right?
If you need to get the products in and out, right?
And it's a very systemic way of doing things. Um. But it's, it, it helps optimize your cash flow, your inventory, your revenue, your sales cycles, um, and all your processes. Right? Right. Now retailers are probably spending countless hours just trying to get to, to some measurable data point of how they're inventory's selling and how to optimize it.
Tommy: Hmm. Yeah, you made a really good point. It's. Inventory that's on the floor, which shelf is limited.
John Ucciferri: Yes, exactly.
Tommy: [00:06:00] Yeah. So you don't have that much shelfing space. How do you know which inventory to hold?
John Ucciferri: That's right and that, that, that's the data that you get in RA is you can see exactly which products are the ones that you should consistently keep on your shelves. You're always gonna wanna experiment with different products, new products, but if you can get to that point where you're measuring effectively, I mean, we've seen retailers who prior to using sellable velocity. We're essentially missing out on a huge revenue potential by not keeping certain products in stock, right? Because they're only measuring on total inventory, not sellable velocity, not their shelf space. So if you look at it just from a shelf space per perspective, then you could optimize and say, I need to continuously run through these cycles of my inventory and always have product available ready to put on that shelf because it continues to turn over. And if I
don't do
that, if I don't do that, I lose out on all [00:07:00] that revenue. Yeah.
Tommy: Yeah, you probably have this data. Do you have the data in terms of like quantifiable, uh, dollar terms, what you've seen retailers hold in inventory or sell before using sellable velocity?
John Ucciferri: So we did a pre-post analysis when we first launched, um, sellable Velocity when we first launched retail analytics. And you know, we've seen retailers. On average, lose about $20,000 in lost sales a week,
Tommy: Wow.
John Ucciferri: just just by, just by not having that data point. By not using that
data point, and conversely by using it can recoup or generate 20,000 more in sales a week by using that data point.
Tommy: Wow. That's . That's too, that's huge.
John Ucciferri: It's significant, right? And um, I think that's the more we can use data. I mean, as you, you and I both know, and as many people [00:08:00] know, data is paramount. So the more you can actually use data to inform your business decisions, the, the better your operation should run. Um, it's not as simple as that. There are people behind that, but,
Tommy: Mm-Hmm.
John Ucciferri: you know, it's, it's, it's key.
Tommy: Well, let's talk about that a a little bit. I, our listeners are very keen on how do we operate more effectively, and we always have this saying, there's really only two ways for you to increase sales. You increase, you can increase the number of customers you serve, or you can increase the transaction size.
Tommy: How should somebody leverage data to increase sales in their business?
John Ucciferri: There's, there's a lot of tenants to that. I think we, we look at both, but we certainly look at average order value and transaction size a lot. Right.
Um, you know, we have a, a payment solution, trees pay, uh, which many of our customers use and have a adopted. And the more we can get customers to [00:09:00] adopt cashless payments, the higher the average order value.
Just, you know, on average. A typical retail environment. So if you're using something like a CH or you're paying with a card, on average, you're gonna spend, you know, 25 to 40% more than if you just use cash. Um, so our retailers are seeing pretty good success by incentivizing that, right? Saying, Hey, if you use your card today, we'll give you a discount or we'll give you some type of loyalty reward for that. Um, so the trade off is the customer gets, you know, some, some discount or something off. Of, of their payment or some reward for future payment. Um, and the, the retailer stands to gain just more in sheer transaction volume. Right. Um, and that's just kind of the basic initial stuff that retailers can do to get their transaction, average transaction size up, average order value up. Um, I think figuring out how to get more customers and building in the loyalty aspect is an, is another [00:10:00] part of that. Um, and, you know, we're, we're constantly communicating with customers and partners on how to do that. We don't sell a loyalty solution, but we have partners that do that. Um, and I think that's, that's a really key component too.
But payments is, is, you know, uh, a huge factor in cannabis. Um, it's, it's something that's a pain point in general, right? Because, uh, you can't just accept any type of payment. Um, but those that that do and, and we're seeing some really good traction with our a CH solution, um, called swifter, is if, if you're able to get your customers to pay more with, uh, cashless payments, your revenue on average per month, we'll shoot up roughly 20 to 25%. Um, and that,
that's huge, right? And the more we can get our retailers. Retailers at large to, to push those solutions. [00:11:00] The more they stand to gain and the better the consumer experience as well. Customers are used to paying with their car, used to not paying with cash. So I think meeting them where they are is, is a really good experience for them and should help with, with increasing revenue for the retailer.
Tommy: What other data points should an operator pay attention to when managing their business?
John Ucciferri: So I think if I look at the entirety of a retail op operation, there's the front end and the back end, right? So on the back end, you're looking at inventory management, product assortment, um. You know, labor costs on, on managing all of that. On the front end, you're looking at your, your front, front of house staff, right?
So your, your bartend tenders, your sales associates and optimizing, you know, their, their performance or, or their, um, their labor right. And making sure that they can balance the role of a bud tender, [00:12:00] which is to provide really good education for the consumer and the ability to, um. Cross-sell and upsell different products, right? The typical kind of sales associate role. Um, so that data is very important as well, right? To see how, which budtenders are performing. Um, what can they do to, to improve their performance. How can we educate them on, on all the products that are being sold so that they can educate the consumer. So there's a lot of different tenants to that. Um, there are specific dashboards within retail analytics that actually show you all of this, um, as well. And so that if you're a GM or a a manager, um, you could see all of that data and you can work with your, your staff. I think it's really important also to understand where sales are coming from, whether it's offline, online, e-commerce delivery. Um, and, and, you know, understand your consumer base and [00:13:00] where they're buying and optimize for that as well. Um, and you know, this is probably where maybe your solution Kaya also kind of crosses over with the trees, which is the, just a sheer, labor to sales data that. Typical retailers will look at to say, when are my really, really busy times? When are my not so busy times? And how do I make sure I staff up when appropriate and I staff down when, when I don't necessarily need all everyone in the store?
Tommy: Mm-Hmm.
John Ucciferri: Those, those data points we constantly hear from customers that. That's what they look at. That's what they need. They need the sales data and all the, the really, really important data points that retail analytics gives you. And they need to tie that data to other platforms, other systems that have other data points, you know, ERP solutions, business Intelligence Solutions, uh, workforce Management Solutions, what have you. And to tie all those, [00:14:00] those systems together is. Is becoming really, really important. And that's also part of what we've been focusing on in the last, you know, three to six months, is how do we tie all those systems together?
How do we take our data and make sure, you know, it can integrate and, play well with whatever other tools retailers are using.
Tommy: What? Decisions can be made by knowing where sales come from. Online delivery in store.
John Ucciferri: So, um, by knowing that you could definitely look at, um, you know, how do I, how do I get more e-commerce sales? How do I get, how do I optimize my marketing spend as well, right? If, if I'm seeing a lot of my, sales that are coming from. , In store then I'm gonna want to focus a lot of my attention on generating as much revenue from the in-store experience as possible. If I'm seeing that, um, e-commerce is working well, um, then I wanna make sure that, [00:15:00] you know, I have a really, uh, top, top of the line E-commerce experience so that I can get the most out of that. Make sure my, my products are, are ready to be sold on e-commerce at all times. Um, but most importantly, I think it's just understanding where, where your customers specifically like to purchase. And there's a, there's a lot of nuances by market, by geo, by store, um, that, that gives you that, that insight. I mean, we have customers who 70% of their, their, their sales are online, in store, uh, e-commerce, uh, in store pickup. And then we have the, the inverse on many other. Uh, customers where it's mostly in store.
So I think it's just a matter of how do we make sure that the experience is, is optimized for where your customers wanna buy, um, and making sure that, that your, your marketing strategy and your budgeting, um, you know, aligned with that.
Tommy: So [00:16:00] as an operator, how can I leverage data to determine if I'm optimized with the SKUs that I have? How do I know that I have too many
John Ucciferri: It, it's not as simple as that. This is, again, an art and science thing. I
mean, there are books that'll tell you, carry a hundred SKUs, carry 50 SKUs. There are consultants who will tell you. I, I've seen it work at 500. It's different per industry. There's no, like, I think one specific standard we typically tell customers 300 or less is probably, I.
Tommy: Hmm.
John Ucciferri: The average you should carry, right? Um, the higher you get the just the harder it is. But some, some dispensaries want that brand. They want to carry everything, right? And they want their consumers to know them for being that, that retailer. Um, so it's a little bit of that at play as well. But from a pure data perspective, I mean, it goes back to what's selling and what's not, right?
Like, you know, that there are gonna be certain brands. Certain products that are gonna fly off the shelf regardless, right? [00:17:00] Those are always the ones you're gonna want to keep in stock. And then they're gonna be the ones that you know, are maybe not as well known or not as well adopted that you're gonna want as maybe your second tier brands.
And then everything else is something you should test with. I mean, we have customers like Embark, um, who, who have 85% of their inventory roughly Standard every, every, in, every location. It's the same products no matter what. And then they play around with the other 15%, right? And so that limits their SKU count, it optimizes their product mix. It keeps things really, really tight. And it also plays with what they're trying to be, which is a kind of an exclusive type of brand. Um, but that's not for everybody. But there is a, there is opportunities to use that data, the inventory data we talked about earlier. To as a starting point, at least to say these are the minimum amount of brands and SKUs I should carry.
Tommy: What other data points that we haven't spoken about that retailers should really, really think about when managing their inventory?
John Ucciferri: I think, I mean profit [00:18:00] margin and, and what we call gross profit,
um, versus just pure gross margin. Right? I think if you can get to a point where you're measuring your average order profit, not just average order value, but the profit you're gaining on every order, that becomes really, really important. And, and you know, we're. There are only a handful of probably customers that can do this really well today, but the ones that do, I mentioned in Embark, they're one of them. That's their whole business model is predicated on profit, right? So we talked a lot about sales, transaction volume, average order value, revenue, but in the end. Profit is key, right?
Revenue growth and limiting, uh, you know, costs out the door expenses are two ways to grow your profit. And, but if you're not measuring that, and if you're not measuring [00:19:00] that on an inventory basis or an order basis, that's really, really hard to get there. And, you know, our goal for next year at Trees is, is to help retailers become profitable.
So. We think the path there is to save on, on labor costs and use a platform like trees to help you do that and, and all the data that, that it gives you and also grow your revenue, uh, to help you grow and, and maintain that profit. But in order to get there, you have to measure it. So when I look at key data points that, that retailers and operators should look at, it's measuring the profit, uh, from your inventory, not just the sell through, not just the um, you know, the, the different products that you're selling or not selling, it's, it's the profit margin. We just came off Green Wednesday. Um, and I think it's really important when we look at a holiday like Green Wednesday to really understand what's happening. And our data shows something a little bit different [00:20:00] than I think what, what you see out there, um, in the public realm, which is that, yes, green Wednesday is a huge sales day. But when you actually look at week over week analysis pre and post, you'll start to see that the total sales volume is not that different week over week. Because what ends up happening is consumers will take Green Wednesday and Black Friday specifically and stock up on those two days because it's a long holiday weekend, and they'll have that, um. That product to use for the entire weekend versus what they probably normally do, which is I'll go on Friday and maybe I'll go on Saturday, or I'll go on Saturday, maybe I'll go on Sunday and I'll buy on different days. They buy in bulk, right? And so they use those two days to buy in bulk. What ends up happening though, is retailers will over discount and say, I want to generate so much revenue on these two days.
'cause I know people are gonna be buying and stocking up
that I'm
[00:21:00] gonna discount heavily. What ends up happening is you look at the, the week
over week analysis and sales jump a little bit. Margins go down
much, much
in a much more dramatic way,
and that's, if you're a retailer, you don't want that, right?
You want to discount because you want to take advantage of people stocking up. but you don't wanna over discount. You wanna be intentional when you're discounting. And so we've, through our customer success team, through our relationships with our customers, we're trying to tell a different story for that specific holiday. To say, think about what you're discounting. How you're discounting, figure out what to discount. Maybe you incentivize or discount if you use a cashless payment solution 'cause they're gonna buy more. Maybe you discount items that you're hard. It's hard to get off the shelf. But I was in dispensaries in New Jersey all day on Green Wednesday, and there's a storewide discount, 20 to 30% off on every [00:22:00] product. And I think that's just not necessary. So there's a lot of data and a lot of applications of the data that can be used but aren't necessarily used. Um, and you know, we're hoping going into next year that that becomes more and more the norm. And we're certainly working hard with our customers to. To make that happen?
Tommy: When, and I see this often running one location is vastly different than running 2, 3, 4 locations. What changes would the data that an operator should look at when managing multiple stores?
John Ucciferri: That's a great question. Um, I think when, when, when you have multiple locations, you have a lot more data. Which is a good thing, but I think overall you still need to zero in on the two to three data points that are gonna move your business the most. At least if you're at the operator owner level or the GM level, and you're trying to maintain, [00:23:00] you know, a certain level of performance across all of your stores, right?
Which has a, as a multi-location or multi-store operator, you should be, you should be looking at the totality. And I think it, it's probably easiest to say, well, I wanna look at all the data everywhere. But you want some top line data on how your business is performing across all the locations. And then you wanna be able to drill down and have your GMs drill down into the specific location.
So I think it's not just what data you look at, it's how the structure of your data architecture within your internal teams. Uh, is laid out, right? So that you're, you're looking at exactly what you need to look at, right? If you have a 20 location, uh, you know, operation that you're very much in tune with, how much you're selling, uh, what profit margins are you maintaining, um, you know, overall what's your discounts?
What does that look like? But just a much more [00:24:00] hierarchical view. And then if, if you're able to have GMs. Cover one or more locations themselves that they start to drill down into their actual store's performance. And the data platform that you use, whether it's trees, retail, analytics or something else, needs to be able to give you that visibility.
I mean, that's the key more than anything is, is you get that visibility and you see exactly is the entire organization is, is working and how each individual shop is, is working.
Tommy: Got, we always, uh, our clients what data is really important to you, and what is the work that you have to do to get that data? I. That's the work that you have to do to get the data is, uh, insightful because if there's work, there's dependencies and oftentimes, uh, it's not being looked at as often as, as they should.
John Ucciferri: Oh yeah.
I.
mean the, the work that some retailers. Have to use, to get to a data point is just as important as the data itself. I mean,
the labor cost alone that you're spending [00:25:00] to find specific data that moves your business, is huge in some instances. And so again, that's, that's where the accessibility and the visibility is, is really, really important. You, you can't afford that.
Tommy: You guys announced something that was, uh, revolutionary in the industry at MJ Bizz. Can you talk a little bit about, more about product catalog with metric?
John Ucciferri: So it's really exciting. Um, this announcement, it's, it's industry shaping in our eyes, right? Um, and it's probably the thing that we hear the most from, from our retail customers is the lack of sophistication in creating products and maintaining products, uh, is, is really, really, uh, challenging, right? And it comes down to two main things.
One is like we've touched on a few times. Retailers are using their own labor, right, often to create these products in their system. And that means hours and hours of finding the right product [00:26:00] image, right product description, right information so that their consumers can see that their, their e-commerce site or even when they're in store and so that their bud tenders know that information and can talk about it as well.
So it, it takes up a huge amount of time. And by not having the right product information, there's no set standard in the space today, right? So if you're on a dispensary website, chances are, depending on who the platform is that that's being used, you're not gonna have the right product image, the right product description. So as a consumer, you lose trust and perhaps you're not, you don't have the information you need to to make a purchase. So those two components alone are really, really impactful.
And I think now for the first time, we have a really, really committed strategic partnership between trees and metric that are focused on solving this problem. Right? And. Metric is a really important piece to all [00:27:00] of this because they're the starting point for all product information, right? That's where brands and manufacturers are going to create their products first in the Metrics Metric platform.
So by having a widget powered by trees inside of Metric to guide and capture all the product information within metric, and then have that information flow through the trees, POS, for those that are using trees for their retail operation, that's. The first time that's ever happened. And if you're a retailer, that's really, really important.
If you're a brand, that's really important, right? You as a brand today have no real way to, um, ensure that your product information is streamlined and working. Exactly, and looking exactly how it should, reading exactly how, how it should, so you have less control and it's your brand. Um, if you're a retailer, you don't have access that you need to all of the accurate verified catalog or product information [00:28:00] from these brands.
So by streamlining that entire process. It gives brands the ability to control their products and make sure that it's, it's displayed and, you know, shown accurately and well. And if you're a retailer, you're gonna have a much more streamlined, sophisticated process to making sure that those products are accurate, um, and that, uh, you too can save your labor so you don't have to do that, and that your consumers that are on your website or in your store are gonna have all the accurate. Product information so that it can make an informed decision. And by doing that, you're gonna increase your sales. So that, that's, this is to me gr, you know, groundbreaking. Um, and, and it's really important I think, for the entire industry, not just for for trees or, or metric, but for the industry at large to have this, this process, you know, be fixed.
Tommy: Yeah, I can imagine how much time it takes a [00:29:00] retailer to do this process manually. When is this gonna be launched?
John Ucciferri: So the, the hope and the goal is that we will have, you know, an MVP first version sometime in the first half of next year.
Tommy: John, I know that we're almost out of time. Thank you so much for your time and you know, we should have you back on as we get closer to, launching the catalog with Metric and I'm sure that our listeners would love to hear, more from you as we reach their milestones.
John Ucciferri: Yeah, I would love to come back. We're excited
for that.
Thanks. So.
Outro: Thanks for listening to the KayaCast podcast. We hope you enjoyed the show. Don't forget to subscribe to our podcast in your favorite podcast app, or visit our website to learn more about our guests and to access the full archive of episodes from the show. Join us next time as we continue to explore the world of cannabis and help you grow, launch, and scale your [00:30:00] business.