Legalized marijuana is becoming big business—and that’s good for companies that supply growers with the soil, nutrients and equipment needed to plant and harvest it.
The U.S. cannabis market could reach $23 billion in total sales to marijuana buyers within the next two years, and the business of selling to commercially licensed growers the equipment and materials for planting and harvesting it is already at least a $100 million industry, according to business research firm New Frontier Data. To cash in on the growing commercial marijuana supplies market, a Denver distributor and retailer is taking its first steps with B2B commerce.
GrowGeneration Corp. is building its first e-commerce site and last week launched as a seller on the Amazon.com marketplace. GrowGeneration—with 10,000 SKUs that range from nutrients, soil containers and plant production supplies to lighting, climate control and hydroponics products—sees selling on Amazon and its own soon-to-be-launched e-commerce site as the best way to build a national sales base and reach a diversified and growing number of more than 7,000 commercial pot growers.
“Amazon allows us to reach an extensive audience of professional growers,” says GrowGeneration CEO Darren Lampert. “By selling through Amazon, we can deliver on a direct basis anywhere in the country, just in time.”
GrowGeneration, which operates a network of 18 stores in California, Colorado, Nevada, Rhode Island and Washington, has made available “several thousand” SKUs on Amazon, Lampert says. The commercial marijuana growers’ market is expanding and 14 additional states are expected to legalize cannabis farming in the next several years, says GrowGeneration. Already 30 states and the District of Columbia have laws broadly legalizing marijuana in some form, according to Governing.com, a news site covering state and local governments.
But the number of commercial growers, while increasing, is fragmented among separate regions, Lampert says. With its e-commerce strategy of building its own website and selling on the Amazon marketplace, GrowGeneration sees an opportunity to build a national brand and sales channel, Lampert says. “We project that Amazon will generate significant sales for GrowGen,” he says. “Online buying is the new normal for American businesses and in order to continue to evolve, a partnership with Amazon is a necessity.”
GrowGeneration has yet to say when it will formally launch its own e-commerce site, although it will be this year, the company says. The company’s website, GrowGeneration.com, already operates with many advanced features, but minus a shopping cart. Business buyers can sign up for a commercial account, search by product, category, brand and price, and post and read product reviews. Online buyers can also view product recommendations and view product specifications.
GrowGeneration’s core customer is a commercial pot grower. But through launching e-commerce and adding more stores in more states where growing and using marijuana is legal, GrowGeneration says it also hopes to attract such additional customer segments as the home cannabis grower and businesses and individuals who produce products like organically grown herbs and leafy green vegetables.
GrowGeneration did not break out e-commerce revenue projections. But the company expects overall sales to double in 2018 to about $40 million from $20 million in 2017, the company said in a recent investor presentation. GrowGeneration is projecting total sales through organic growth and by acquisition to reach $100 million in 2020.
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