After co-founding Toronto-based Namaste Technologies as a modest e-commerce site more than a decade ago, Sean Dollinger made a series of moves that propelled the company from a garage-based vaporizer shop to what some have dubbed the “Amazon of cannabis.” Today, the company sells vaporizers and smoking accessories through more than 30 websites in 20-plus countries, including Canada, Britain, Australia and Brazil.
Dollinger helped build the brand by:
- Establishing a presence in up-and-coming markets.
- Deploying artificial intelligence to improve shoppers’ experiences.
- Relying on technology to bolster inventory management.
- Beefing up customer service and relying on third-party review systems to keep customer feedback transparent.
The company is also wading into new markets beyond vaporizers and accessories.
It plans to enter the retail medical marijuana space in Canada through its 2017 acquisition of CannMart, a deal that will allow Namaste to sell MMJ from a variety of producers both from Canada and abroad.
The company also rolled out NamasteMD, a telemedicine portal that connects Canadian MMJ patients with doctors; the portal has attracted 6,000 registered users since it launched in the spring.
In recent months, in fact, Namaste has issued a flurry of news releases covering acquisitions, partnerships and other news. In late July, for example, Namaste submitted paperwork to list on the Nasdaq Capital Market. In the nine months through May, the company rang up sales of $11.2 million (CA$14.6 million), more than double the amount of a year earlier.
“Hard work really does pay off, that’s all I’ll say,” Dollinger said.
Hunt for New Markets
Soon after its founding in 2005, Namaste was moving three or four vaporizers per day. Shortly after going public in 2016 – Namaste trades on the Frankfurt Stock Exchange, the U.S. over-the-counter markets and Canada’s TSX Venture Exchange – the company announced record monthly sales of more than $770,000.
What decision turned that first trickle into a steady stream? Simple, Dollinger said: “We looked for areas where vaporizers weren’t in the world.”
The company spotted openings in the nascent British and German markets, for example.
“We started to move product globally as quickly as possible,” Dollinger said.
Dollinger calls going public the best money he ever put into the company. Doing so gave Namaste access to capital to extend its international reach.
The decision, which Dollinger estimates has garnered just shy of $46 million in capital, “allowed us to make acquisitions that we never would have dreamt we would have made,” he said.
For example: Namaste bought Australian Vaporizers, which controls 90% of the vaporizer market in Australia, for $4.2 million in 2017. In the three months ended May 31, 2018, the company rang up $1 million in sales Down Under.
Invest in Customer Service
Dollinger believes that in any competitive market – cannabis or otherwise – the only way a company can differentiate is by becoming “obsessed with customer service, really going above and beyond.”
In May 2018, Namaste paid $12 million to acquire Findify, a Swedish company that uses artificial intelligence to study user behavior to personalize online experiences in real time. Findify’s platform provides consumers with personalized search, product recommendations and advanced data analytics.
“We believe that this will give us a much-needed lift to provide the customer with an unbelievable experience while shopping on our site,” Dollinger said.
“If I was being shown a whole bunch of women’s clothing on Amazon while shopping for men’s clothing, it would not make for the best start to a shopping experience,” he said. Similarly, “If you’re shopping for vaporizers that go with a dry leaf, why would I show you one that goes with an oil? That’s really what that whole experience is about.”
Findify was an expensive investment for Namaste to apply to its many sites, but by purchasing it, Namaste’s 30-plus websites now have access to the technology. And customers seem to be responding: Sixty days after bringing on Findify, Dollinger said that one of the company’s sites, Australian Vaporizers, saw conversion rates jump from 4% to 6%. Conversion rates refer to the percentage of people who visit a website and make a purchase.
Namaste also listens carefully to its customer base. By popular request, it added additional hours of live customer chat, shortened its email customer response time by streamlining customer support procedures and arranged e-inventory based on feedback.
“If a product gets a lot of negative feedback, we don’t want to put that in front,” Dollinger said. “We even go to the extent of putting warnings on the site. If the product is defective, we want the customer to know.”
Why doesn’t the company simply remove defective inventory? “It’s not for us to decide, it’s for us to educate,” Dollinger said. “If somebody is looking for ABC Vaporizer and they know it’s bad, but they still want it, why wouldn’t we provide it?”
Don’t Be Overconfident
Namaste’s rise may appear alluringly fast, but Dollinger warns aspiring entrepreneurs to stay conservative in their outlooks.
“You always think you’re going to end up having more money than you have, and that’s one of the biggest challenges – whether you’re starting a restaurant, an e-commerce store, anything. … If you don’t properly prepare, it can get really bad really quick.”
He recalled when Namaste was starting, “we thought X amount of dollars would be enough to help us. But then a new product comes in, and you want to add it. Then all the money you’re making is being rolled back into the business, to the point where you’re spending more money than you started with.”
Going public, he said, helped mitigate the costs that came with growth.
Even though Namaste has acquired the moniker “Amazon of cannabis,” Dollinger keeps in mind the lessons of failed companies such as Blockbuster and Kodak as a reminder to stay paranoid and open to new ideas.
“No matter how busy I am, if somebody sends me an email to look at their company or to explore something, I never just shut something down,” he said.
Dollinger also advises business owners to keep an eye on the big picture. “From a capital-markets perspective, no matter what you might think, you have absolutely no control of your share price.” He warns against the distraction that can come with obsessing over the markets. “If you look at your company over a 30-day period, has it changed that much?” Small dips can cause disproportionate mood swings in the office.
He admits, however, that it can be difficult to follow his own advice. “I still check in on our company’s share price at least twice a day,” Dollinger said.
“You just have to remember to stay balanced and work hard at what you’re building out.”
– Claire Zulkey
Solving the Inventory Dilemma
Sean Dollinger’s career in e-commerce spans more than two decades and has involved moving tangible products in four different industries. The job of managing inventory has been one of his biggest challenges – until now, thanks to technology. Several months ago, Dollinger’s company, Namaste Technologies, shed the tricky task of inventory purchasing – and became more profitable because of it.
“You have so many challenges,” Dollinger, Namaste’s CEO, said of inventory purchasing. “Keeping stuff in stock, that’s No. 1. Then, No. 2, do you overbuy? What do you do if you’re forced to buy colors, which do you choose? What about accessories? Do you buy all of them, or only some? Where’s the line in the sand? And then there’s theft – stuff goes missing in the mail.”
Toronto-based Namaste sells vaporizers and smoking accessories via more than 30 websites in 20-plus countries. In the past year, Namaste was able to invest more in its technology, which allowed the company to utilize application program interfaces (APIs) to solve the problem of inventory purchasing. API allows software applications to communicate. In Namaste’s case, the company uses the technology to log in to partners’ warehouses and display inventory in real time on Namaste’s own customer-facing websites.
“It’s a set of routines and tools that allows our software to grab other people’s software,” he explained. “We’re able to go into your inventory and make it look like what you have in stock is on our website, so when you run out of the black pair of sunglasses, instantly it marks those black pair of sunglasses as out of stock on our website.”
With API, Namaste plans to increase its inventory from 4,000 products to 10,000 by the end of this year and 100,000 available for purchase by the end of 2019 – all without the company needing to hold a single piece of inventory.
It’s a decision that takes money and a certain amount of size and experience to implement. “You have to make sure that the systems are working properly, or else it can become a nightmare,” Dollinger said, “like if the code isn’t right and everything that’s supposed to be in stock is out of stock, or if there’s a delay in the API and something sells out and the customer buys it.”
His advice to other companies implementing API to get away from product inventory: “Take your time and make sure everything is operating. Don’t be scared to keep testing and testing and testing.”
– Claire Zulkey