{"id":14403,"date":"2021-03-22T23:34:49","date_gmt":"2021-03-23T03:34:49","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/eaze-leveraging-data-analytics-in-the-cannabis-industry\/"},"modified":"2021-03-22T23:34:49","modified_gmt":"2021-03-23T03:34:49","slug":"eaze-leveraging-data-analytics-in-the-cannabis-industry","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/eaze-leveraging-data-analytics-in-the-cannabis-industry\/","title":{"rendered":"Eaze: Leveraging Data Analytics in the Cannabis Industry"},"content":{"rendered":"

Overview of Eaze <\/u><\/strong><\/p>\n

Eaze is a software platform and marketplace that connects eligible customers to licensed cannabis dispensaries in California. It also provides delivery services to customers \u2013 so it also identifies as a logistics company.<\/p>\n

So far, the company has raised ~200 Mn USD in 10 rounds of funding since its launch in 2014. The company has between 150 \u2013 250 employees. As of Jan 2020, the company has completed more than 5 million deliveries serving 600,000 customers with an average transaction value of 85$.<\/p>\n

The value proposition for customers is convenience and fast delivery in buying a wide variety of cannabis products from a wide variety of producers while maintaining privacy. For producers, the platform offers access to a larger customer base and larger transaction volume. Like many other platforms, Eaze acts as a middleman between end customers and producers.<\/p>\n

Industry Challenges <\/u><\/strong><\/p>\n

Broadly, the Cannabis industry has been shifting very quickly in recent years. Multiple challenges still face the industry: it is very fragmented with highly shifting regulations. This results in limited access to aggregated data on customers’ preferences as well as any feedback from the customers and to customers. The traditional supply chain makes it hard for producers to have any interactions with customers. Enter Eaze!<\/p>\n

Data Analytics As a Solution<\/u><\/strong><\/p>\n

In 2016, Eaze launched its Brand Insights Program (BIP). After 2 years of operations, the company was sitting on a wealth of data relating to customer interactions done on its platform (customer demographics, buying habits, product preferences, feedback, etc.). The data was harnessed to derive customer insights that can be useful for producers. Understanding customer demographic trends, customer preferences changes, and adoption rates of new products can help producers better plan the production and innovation around products.<\/p>\n

On the other hand, Eaze also allows producers to publish educational content for customers to also understand all innovative products and how to utilize them \u2013 something that was previously not possible given the nature of how the business worked.<\/p>\n

To enable these capabilities, Eaze hired a team of data scientists. Eaze already used AWS for data storage. Once data scientists were hired, the rest was relatively easy to complete.<\/p>\n

Sample insights<\/u><\/strong><\/p>\n

These insights were taken from the BIP report in 2018 that was derived based on the 450000 customer base that Eaze had back then along with the responses from 4000 survey respondents :<\/p>\n

Sample 1:<\/strong> New buyers are powering the wellness trend<\/p>\n

\"\"<\/a><\/p>\n

Sample 2:<\/strong> Baby boomers spend the most each month on average \u2013 could be used for identifying high-value customers for targeted higher-end products<\/p>\n

\"\"<\/a><\/p>\n

Sample 3:<\/strong> Women are steadily gaining ground in the cannabis market \u2013 understanding demographic shifts of customers, and potentially focus innovation efforts on the most growing demographic<\/p>\n

\"\"<\/a><\/p>\n

Sample 4:\u00a0<\/strong> Regional analysis \u2013 identifying under-represented regions and potentially increasing ads spending in those regions to grow the customer base<\/p>\n

\"\"<\/a><\/p>\n

Sample 5:<\/strong> Winning products analysis \u2013 helping producers identify winning products for future innovation<\/p>\n

\"\"<\/a><\/p>\n

Challenges & Opportunities <\/u><\/strong><\/p>\n

The company still faces multiple challenges<\/p>\n

    \n
  1. Profitability<\/strong>: while Eaze has been netting up to 800k \u2013 1Mn in daily revenues, most of this revenue is going to producers and other overhead costs. The company has struggled with its profitability formula and is experimenting with verticalization and other initiatives<\/li>\n
  2. Scalability\/ Regulations:<\/strong> scaling beyond California has been particularly challenging given that not all states have legalized cannabis yet. Regulations will always be a big hurdle for the company<\/li>\n
  3. Funding\/ Loans\/ Working Capital:<\/strong> given the nature of the company, banks typically do not offer loans to cannabis companies. As such, Eaze had to rely mainly on funding from VCs. This has put pressure on its working capital which drove some of its manufactures out of the platform \u2013 namely Caliva, a well-known producer in the cannabis industry – due to late payments from the platform to the producers<\/li>\n<\/ol>\n

    In terms of opportunities, the company can consider a different set of options:<\/p>\n

      \n
    1. Expanding beyond Cannabis alone: <\/strong>as an example, the company could start delivering food or buy a food delivery company and realize synergies on that end<\/li>\n
    2. Expanding geographies: <\/strong>with cannabis getting legalized in more states, the company should definitely look into expanding into these states<\/li>\n
    3. Verticalization: <\/strong>the company is already experimenting in selling its own brand of cannabis-related products to realize some additional profitability \u2013 the power of data insights will help it prioritize certain product categories, etc.<\/li>\n<\/ol>\n

      Despite the different challenges, Eaze was able to raise a series D round of 35 Mn USD in 2020. Regardless of whether the company manages to move beyond its short-term problems, Big Data has definitely shaped the rising Cannabis industry and Eaze enabled that.<\/p>\n

      Sources<\/strong>:<\/p>\n

      https:\/\/www.eaze.com\/<\/a><\/p>\n

      https:\/\/www.crunchbase.com\/organization\/eaze-2<\/a><\/p>\n

      \u201cEAZE INSIGHTS | State of Cannabis: Consumers diversified in 2018\u201d. 2019. Eaze.com
      \n      https:\/\/www.eaze.com\/article\/insights-2018-state-of-cannabis-report-marijuana-consumer-diversify<\/a><\/p>\n

      \u201cMarijuana delivery giant Eaze may go up in smoke\u201d. 2020. Techcrunch.com. https:\/\/techcrunch.com\/2020\/01\/16\/eaze-out-of-cash-to-burn\/<\/a><\/p>\n

      \u201cEaze Leverages Data to Provide Insight to Leading Cannabis Brands\u201d. 2016. New Cannabis Ventures
      \n      https:\/\/www.newcannabisventures.com\/eaze-leverages-data-to-provide-insight-to-leading-cannabis-brands\/<\/a><\/p>\n

       <\/p>\n","protected":false},"excerpt":{"rendered":"

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