Cannabis Packaging Pain Points: High Minimum Order Quantities
All cannabis businesses need compliant packaging in order to legally sell their product...
All cannabis businesses need compliant packaging in order to legally sell their products. However, cannabis businesses come in all shapes and sizes, with varying needs when it comes to packaging. This is one of the many reasons that high minimum order quantities can become a major roadblock to running a smooth operation in the cannabis industry.
And when the livelihood of your cannabis business is dependent on compliant packaging that fits the specific needs and size of your business, high minimum order quantities can be both frustrating and detrimental to your success.
This is the fourth blog post in our series about cannabis packaging pain points. The first three posts examined slow turnaround times & long lead times, expensive shipping & international shipping challenges, and poor customer service.
This blog post examines issues associated with high minimum order quantities, what causes these issues, and how you can address them.
High Minimum Order Quantities
So why do high minimum order quantities exist and what challenges do they pose for cannabis businesses?
Low Margins Offset by High Volume
Generally speaking, packaging is a low-margin high-volume industry. In other words, packaging is a volume play and the profitability of most packaging companies is predicated on a volume-based sales model that offsets the low margins of individual packaging products.
This has led most packaging suppliers - both in and out of the cannabis industry - to rely on high minimum order quantities in order to make ends meet and create a path to profitability.
Unfortunately, these conditions do not lend themselves to supporting the needs of small businesses like fledgling cannabis startups.
Many packaging suppliers source and manufacture their packaging products overseas. This also contributes to high minimum order quantities due to the simple fact that it’s financially inefficient to ship small orders long distances.
Inefficient Shipping Options
Shipping is one of the largest operational costs for packaging companies. Oftentimes we find that the order quantities that make the most sense from a cost-efficiency standpoint for shipping wind up being larger than the immediate needs of your cannabis business.
So in a world where packaging companies want to ship pallets, and cannabis businesses want to order parcels, how can we work together to find efficiencies and order quantities that make sense for both parties?
Cash Flow Concerns
As we mentioned above, cannabis businesses come in all shapes and sizes and many cannabis businesses are startups. With that in mind, high minimum order quantities rarely fit the needs of cannabis businesses or the realities of their cash flow.
Depending on the stage of your cannabis business, there are a variety of cash flow scenarios and concerns to consider, and having to order more packaging than you need to satisfy a minimum order quantity can cause an unnecessary financial strain on your business.
Solutions to High Minimum Order Quantities
Ultimately, the best way to address any cannabis packaging pain point is to work with a packaging supplier you can trust and to build a long-term relationship with your packaging supplier.
So what are some steps you can take to find successful workarounds for high minimum order quantities?
Talk to Your Cannabis Packaging Supplier
It all starts with a conversation! You have to talk to your cannabis packaging supplier to ensure you are on the same page. Only then can you begin building the trust required to sustain a long-term working relationship.
Ask These 3 Key Questions
1. Does my business have space to accommodate high minimum order quantities?
For many cannabis businesses, one of the main frustrations with receiving a large shipment of packaging is that they simply lack the space to hold excess packaging beyond their immediate needs.
If this description fits your cannabis business, something to consider is allocating space in your dispensary or warehouse specifically to store additional packaging. That way, when you receive an order of packaging that contains more units than you need in a given moment you have a system in place to handle the extra packaging and keep your business running smoothly.
2. Can I accurately project my packaging needs over a longer period of time?
Accurate projections are a crucial part of any procurement process. This is especially true if you are hoping to turn the frustration of high minimum order quantities from a potential headache into a competitive advantage.
Did you know that ordering larger quantities of packaging can benefit your business in the long run because it will generally lead to more efficient pricing and shipping costs?
Accurate sales projections will lead to higher confidence in placing larger packaging orders, if you have the space to accommodate the excess packaging.
3. Does my packaging partner understand the needs of my business?
It is incredibly important to build a strong working relationship with your cannabis packaging supplier so you can better understand each other's needs and. A strong working relationship with your cannabis packaging supplier will also make them more likely to go out of their way to help you meet the unique needs of your business.
If your cannabis packaging partner has a solid understanding of your business, there are often opportunities to be more flexible. Whenever possible, we are happy to work with our customers and offer lower minimum order quantities, split orders, payment terms, and other solutions that can help ease the financial constraints and storage constraints of our customers.
Key Takeaways About High Minimum Order Quantities
As we mentioned above, the best way to address any cannabis packaging pain point is to work with a packaging supplier you can trust and build a long-term relationship with.
Some of the best ways to mitigate high minimum order quantities are to ensure your cannabis packaging supplier has:
1. Flexible lead times, minimum order quantities, and payment terms.
2. A dedicated sales representative that knows you, your business, and your needs.
And if possible, try to ensure that your cannabis business has:
1. A dedicated physical space to store excess packaging if needed.
2. Accurate sales projections that allow you to feel more confident when placing larger packaging orders.
One of the best ways to communicate your cannabis brand’s commitment to sustainability is through your packaging, but you need to have packaging that prioritizes sustainability first!
Contact us if you’re ready to discover the real impact your packaging has on the environment and you’re ready to build a long-term relationship with a cannabis packaging company you can trust. It all starts with a conversation!