3 min read

How to Choose a Marijuana Delivery Service Business Model

August 8, 2019

Setting up a marijuana delivery service is no easy task and deciding what type of business model will be the most cost effective will determine your success. As more and more states legalize medical and recreational cannabis, delivery will be a convenience that many customers will use to have easier access.

There are essentially two business models that have proven effective in states where marijuana delivery service is legal. The hub based model where drivers pick up specific orders that have already been placed or drivers carry an on-board inventory and fulfill orders as they are assigned.

Hub-Based Marijuana Delivery Service

Sprawling cities like Los Angeles force most marijuana delivery services to use a hub-based business model to cover a broader territory. The licensee will establish multiple fulfillment hubs that handle the orders only within their territory. This reduces the amount of fuel used by drivers and reduces the delivery time for customers. 

It’s critical for a hub-based marijuana delivery service to use a POS software that can split batches and transfer inventory from hub to hub. As new product is added to the inventory, each location will need to carry all products that are offered on the online menu. If one location runs out of a certain product, more inventory can easily be switched to a different hub.

Sometimes problems can arise with delivery drivers picking up the wrong order at a fulfillment hub but this can be resolved with a smart delivery software. Drivers will be able to scan the receipt of each order using the delivery app to see if it belongs to them, and if it’s assigned to them it will automatically be added to their delivery queue. This prevents any confusion amongst the drivers and avoids late delivery orders.

Another mandatory feature for every hub-based marijuana delivery service is the ability to define their territory. Smart delivery software will allow dispatchers to set a specific perimeter for their service area as to not interfere with orders from a different hub. Another advantage of hub based delivery is that the sales analytics will be a true reflection of the service area allow managers to optimize the inventory at each location.

On-Board Inventory Delivery Service

The other type of marijuana delivery service business model is providing drivers with their own on-board inventory, commonly called the ice-cream truck model. This style of delivery is a bit more risky but can significantly cut back on expenses and customer wait times in smaller urban area. It’s imperative that all drivers are aware of how much they can carry as many states have cannabis regulations that set limits on the worth of on-board inventory. 

All delivery drivers will be assigned to orders based on what products they are carrying and their proximity to the order location. Fortunately, advanced delivery software can show dispatchers the exact location of each driver and their onboard inventory. Smart order assignment is revolutionary delivery feature from IndicaOnline that will suggest the best driver for each order and provide multi-stop route mapping to avoid traffic delays.

Once an order is assigned and added to the drivers queue, the customer will receive ETA text notifications when the driver is en route. All transactions can be processed within the mobile delivery app and drivers can send receipts directly to the customers email. It’s very important to train drivers who carry on-board inventory to take excessive security precautions to prevent theft or robbery.