Cannabox, an online-only subscription retailer, has seen revenues surge 40% month on month as the COVID-19 lockdowns accelerate the shift to e-commerce and leave brick-and-mortar competitors struggling to survive.
The past few months have been exceedingly difficult for all retail stores. With half the world under quarantine, footfall has fallen off a cliff. Rather than braving physical stores, people have been choosing to purchase their products online, away from any risk of catching COVID-19. The trend of shopping going online has been accelerated incalculably due to the turn of events, condensing what analysts expected to be a decade of gradual behavioural shift into a matter of weeks. All these shifts are encouraging for firms such as Cannabox, whose business is solely online. The past month has been the best month since Cannabox's inception. Their numbers are looking impressive, with a 40% rise in month on month revenues.
Not only do they have their subscription box business, but integrated into the same website is their online retail shop named "The Stash". Here you can purchase a variety of accessories, with the convenience of online shopping being that you can browse and purchase products at your leisure, not confined by opening hours or geographic limitations. Customers can take their time exploring options, reading reviews, and making informed decisions without the pressure of a sales assistant hovering nearby. Cannabox have said that if it were not for their online presence, they would most likely be out of business.
This model was an unorthodox one, as many of Cannabox's competitors have chosen to operate retail stores. The risk has clearly paid off for Cannabox. While their retail competitors struggle with dwindling sales figures, Cannabox's business is booming. Physical retailers have been hit with a double blow: the fixed costs of rent and utilities continue regardless of whether doors are open, while revenue streams have effectively evaporated overnight. Those without an established e-commerce infrastructure have found themselves scrambling to build one from scratch, a process that takes time and capital that many simply do not have in a crisis.
The contrast between the two approaches is stark. Cannabox's decision to skip brick and mortar entirely meant lower overhead costs from the beginning, allowing them to invest more heavily in their digital platform, customer experience, and marketing. When the pandemic hit, they did not need to pivot. Their business model was already built for the exact scenario that unfolded. Their existing digital infrastructure was ready to handle increased demand without the growing pains that traditional retailers suddenly forced online are now experiencing.
The pandemic has served as an unintentional stress test for retail businesses everywhere. Companies that embraced digital transformation early have demonstrated remarkable resilience. Those that remained tethered to physical locations alone have faced an existential reckoning. The implications extend well beyond the current crisis, as consumer habits formed during lockdown may persist long after restrictions are lifted. People who never shopped online before have now been forced to try it, and many are discovering that the convenience is hard to give up.
The future also looks bright for Cannabox. As the age-old business saying goes, it costs ten times more to gain a customer than keep one. Many of their new consumers will likely choose to stick with Cannabox due to the sheer convenience and ease that comes with the business model. A subscription box arriving at your door each month requires almost no effort, and that frictionless experience builds loyalty quickly. Once a customer experiences that level of convenience, returning to the old way of doing things feels like a step backwards. It would not be surprising to see yet another bumper month in sales for the firm in May, and quite possibly beyond that as the new normal takes hold.