Speaker Spotlight: Roie Edery, Founder & CEO of Ginger Commerce
Ginger Q&A
Roie Edery, Founder & CEO of Ginger Commerce
Interviewed by Erin Roche
Q: What is Ginger?
Ginger is a direct-to-consumer (DTC) e-commerce tech platform geared towards servicing cannabis brands and regulatory complex markets. Our mission is to help brands open up a new channel to be able to sell their products directly to the consumer. Today, most cannabis brands’ revenue come from retail sales or delivery services, which are essentially the same thing. There are a lot of issues with these channels; it’s inefficient and there are a ton of costs associated with penetrating and then maintaining a retail presence. Ginger is offering brands a new and exciting channel that allows them better margins and ownership of their customer data.
Q: What is your background and why did you start Ginger?
I had a 15 year tech career before I got into the cannabis space in 2014, when with two friends, I co-founded Eaze, a marketplace delivery service out in California. I got more involved in the space and founded a brand, CLICK Spray back in 2020.
In the process of running my own cannabis brand, I experienced just how difficult it was to penetrate and maintain a retail presence, especially in a state like California. It was lightbulb for me just how expensive sales teams are; you have to put in to work with a distributor to get into all the retail outlets and then to succeed once you’re in there is very tough. Unfortunately, that's the way the industry is laid out, the brand is often the one left holding the bag. In the end, the brand is often the one that bears the brunt in terms of lack of payment, having to sacrifice margins, subsidize it, get wholesale sales, etc. After that experience, I knew we had to find another way for brands to sell to consumers.
Q: Tell me a little more about the team at Ginger. First, how long have you been around, what has the evolution of the team looked like and where are you today?
We founded Ginger about a year and a half ago but we fully launched in April of last year. The team from a founder’s perspective is myself and Aleksey Klempner, who was also my co-founder at Eaze and is our CTO. We’ve got over a 10-year track record of working together on start-ups in the cannabis space. He and I are pretty well-seasoned and bring a wealth of experience to Ginger, with both of our backgrounds in the technology space. We really rely on partners who do our delivery and we have a very small desk team with a couple of account managers.
Q: Are you planning to expand outside of California?
At the moment we’re only in California, but we do have our sights set on multi-state expansion this year. We are in active conversations in New York and New Jersey, and I would say Michigan and Illinois are also possible.
Q: What would you want investors to know about Ginger?
Ginger is a technology platform. The advantage there, from an investor standpoint, is that we do have really good scale. Essentially, we have a software as a service (SaaS) company but a transactional business model. One of the things investors don’t like about the cannabis space is it’s very cost heavy, especially as you get into touching the plant, logistics, retail; most of the supply chain is costly. But Ginger is a tech platform, and our burn is a typical tech startup style burn. So even though I rent software which most companies' revenue would come from selling seats or a flat fee a month, my revenue is derived from taking a percentage of the sale. That’s the magic for investors – your burn is like a software company but you’re not going to need 1,000 paying clients that each pay you $1,000 to make money. You could just have five or six really good brands and the sky’s the limit.
However successful those brands are, you will make money. You’re like a dispensary from a revenue model, but you don’t have the burn rate of a dispensary. That’s another takeaway. I would also say, where we are in our evolution, we have proven out the market, we have signed some of the top brands in California and are now ripe to scale across the country. Since our launch, we have made thousands of deliveries. Where investors are investing in the evolution of the company is at that inflection point where they’ll feel growth.
Q: Can you share the number of brands you currently have and what your goal is for next year?
We have five live brands and 30 under contract coming online. Some of the live ones are Buddies Brand, Lime Cannabis, Pamos and THC Design.
Q: What are the benefits for a cannabis brand to sign on with Ginger?
Brands get higher margins with Ginger. Ownership of customer data and the ability to market directly to the customers and build a hedge against the woes of retail.
DTC is a way to reach customers that brands might otherwise not. We love this concept of DTC as a way for brands to find, keep and grow brand loyalists. The reason for that is that it’s a completely different consumer who is going into the dispensary versus buying online directly from the brand. For example, I can get coffee anywhere, but I have a favorite coffee shop that sells their goods online. I have their machine that I use all the time because I’ve become a brand loyalist and I don’t have to look up where to buy their brand or what outlets sell it, I can just buy it straight from them and then once a month I have coffee show up at my door. That is absolutely brand new and not something you can do as a cannabis brand in the current retail channel.
Q: Because it is a different channel for brands, do you offer any help or support consulting when it
comes to the different marketing requirements needed to go in this direction?
Yes, we absolutely do. There are three things that are required for DTC to succeed. First, you need the ability to warehouse, pack and deliver. Ginger natively offers that as a part of its core solution. You also need technology, which is the ability to list the products on your website, a compliant checkout, inventory management and all of that. That is actually Ginger’s core competency; we are a tech company; we’ve built a tech solution that allows for the very native embed of the shopping experience on the brands’ website.
Then the third and final need is demand. Ginger offers two out of three solutions as part of its core competencies, but demand generation, that is a new service that we’ve recently started to offer. We actually mandate our brands to spend a minimum amount of money on marketing to drive traffic to their DTC website. Not only do we offer it, we mandate it! We are also building a digital brand ambassador program where ambassadors earn money by referring customers to our brand partners’ website. If you’re a brand and you signed up for Ginger (we have no signing fees, no monthly fees), all you have to commit to is a $5K per month marketing budget which goes to drive traffic to your website.
You work with Ginger, you have a turnkey solution. You have a channel that is literally eat-what-you-kill, so all you need as a brand is a good product at a good price and a good marketing team.
Q. Many CPG companies survived or launched and are successful today because of DTC and digital marketing. Is the cannabis industry ready for DTC?
Ten years ago when I entered the cannabis industry, brands were just starting to pop up. If you looked at the bench of who was working at a brand back then, it was cultivators, growers, and execs. That was pretty much it. Then if you fast forward to today and look at the bench on the executive level of a cannabis brand, outside of the farmers, the growers, the cultivators, and outside the executive team you will find a CPG team. You will find people who came from outside of the industry and brought that expertise on how to succeed in the retail channel – messaging, signage, packaging, etc.
So, as a brand in retail, they had to up level and create a CPG department [and they’re successful in that regard], but economically it’s not succeeding for them. They are finding cannabis retail to be almost impossible to navigate. If you look two or three years from now at a typical cannabis brand, at least a successful one, I’m betting you will find an e-commerce/digital marketing team. And that’s what’s going to make brands successful, an investment in a digital channel! I think we’re at an inflection point where there will be a huge change in the industry, you have people who are already doing it, and Ginger is a digital marketer’s dream come true.
Q: Where can we find more information about Ginger?
You can visit our website at https://www.gingercommerce.com/. If anyone is interested in learning more about the company and what we are building with an eye towards investing, please have them reach out to info@kahnerglobal.com.
The Cannabis & Psychedelics Investment Summit Series showcases the best and brightest cannabis and psychedelic entrepreneurs and is the premiere summit for institutional investors, family offices, and ultra high net worth investors. Request an invitation to attend the upcoming summit taking place February 27, 2023 in Miami, FL at www.kahnerglobal.com. Please email us at info@kahnerglobal.com for speaking and sponsorship opportunities.
