Back to Basics

By putting tried and true retail strategies to work in the cannabis space, Zips Cannabis has turned its newest location into one of Seattle’s top-selling stores

In the early part of 2019, it was an open secret in Seattle’s cannabis industry that the Diego Pellicer store was on the verge of some sort of major shakeup. By the summer, those whispers were confirmed: Diego Pellicer was out; Zips Cannabis was in.

And within a few months, Zips had not only overhauled the look and layout of the SODO District cannabis shop, but also more than doubled the average monthly sales, vaulting what had previously been a middle-of-the-road retailer in terms of sales to one of the top 20 shops in Washington state.

The almost-instant success left a lot of people wondering: What’s the secret?

But according to the company, there really isn’t a secret. Zips management hadn’t cracked the code on cannabis marketing or done any outlandish stunts to attract customers.

In fact, the recipe to the company’s success is right on its website: Best selection, best prices, best budtenders.

“It’s about making sure people have a good experience,” says general manager AJ Tena. “They’re not going to come back if they don’t have a good experience. There are too many other options.”

store interior

From the brick façade to the sales floor, the new Zips layout is welcoming for customers. Photo by Garrett Rudolph.

CUSTOMER FOCUSED

Zips Cannabis acquired Diego Pellicer’s retail license and took over its location on Fourth Avenue in Seattle, just a few blocks south of the Mariners’ and Seahawks’ stadiums, and almost immediately began the remodeling process.

It only took a month or two before sales started to grow substantially. By Q1 of 2020, according to 502Data.com, Zips had increased year-over-year monthly sales by more than 200%, from about $185,000 a month in 2019 to more than $560,000 this year.

Tena says the explanation is simple, and it has to do with focusing on retail fundamentals.

First, Zips has a huge selection. Tena says the company listens to its customers and enjoys bringing in new brands and new products.

“If they want something, we go out and try to get it,” he says. “It doesn’t work all the time, but most of the time, we can get them what they want.”

Second, the company focuses on low prices, particularly on ounces. Tena says about 90% of customers shop based on price, so having plenty of low-cost, high-quality cannabis keeps the shoppers happy. Customers might not go out of their way to save a couple dollars on cannabis, but they’ll keep coming back if they know a shop consistently has the best deals in town.

And the third component of the company’s success — having the “best budtenders” — is probably the most important factor of all, Tena says.

Zips puts an emphasis on hiring employees who are friendly and engaging, people who care about their jobs and their customers just a little bit more than the average worker.

“It’s tough to keep a smile on your face after showing somebody every eighth we have in stock,” Tena says.

At the end of the day, Tena says, they key is “doing right by the customer.”

In addition to its Seattle location, the company has two stores in Tacoma, having rebranded Highway 7 first, followed by Two Five Trees. Tena says each store has a similar look and the same focus on customer service that have helped make Zips Cannabis one of the top five cannabis retail chains in the state in total monthly sales.

Rather than using print or digital advertising, Zips has relied on word of mouth for its marketing. If customers have a good experience, they’ll come back, says general manager AJ Tena. Photo by Garrett Rudolph.

LESS FORM, MORE FUNCTION

The transformation from Diego Pellicer to Zips Cannabis was no small task.

Diego Pellicer had been one of the most well-known and heavily publicized cannabis retailers in the Pacific Northwest, having attracted plenty of media attention for its ultra-luxurious interior.

Tena describes the Diego Pellicer motif as “shock and awe.”

“It just wasn’t set up for a retail environment,” he says.

Diego Pellicer was one of the first dispensaries in the country to take a high-end approach, looking more like a jewelry store than a typical cannabis shop, with a combination of granite and Spanish tile and the cannabis products and accessories being locked up in glass cases throughout the shop. At its 2016 grand opening, the company staged a $3,600 one-ounce cannagar as the pièce de résistance for wealthy connoisseurs.

The Fresh Toast called it “Seattle’s swankiest marijuana store.” Matador, a travel and lifestyle website, proclaimed it one of the seven best recreational dispensaries in Seattle. The Spokesman-Review’s Evercannabis publication said it offered “cannabis with class.” And it was even spotlighted as one of 21 amazing cannabis retailers in North America in the September 2018 issue of Marijuana Venture.

“Any list of the world’s most luxurious marijuana shops would be incomplete without Diego Pellicer,” the magazine wrote. “The high-end cannabis retailer’s flagship Seattle location absolutely sets the standard. If not for the product on the shelves, Diego Pellicer could easily be mistaken for the lobby of a five-star resort, complete with crystal chandeliers, tile mosaics, Tuscan pillars and an array of elegant statues and vases.”

But when Zips moved in, almost all evidence of Diego Pellicer was removed — except the employees, the majority of whom made the transition with the new ownership group.

The two companies operate on entirely different premises: Diego Pellicer was glitz and glamor, hype and hyperbole; Zips Cannabis is understated and efficient, more customer-centric.

Diego Pellicer’s black exterior and wrought iron gates were replaced by a brick façade and a more inviting entryway. The Zips interior is reminiscent of a sports bar, bright and open, with a giant flat-screen television on one wall. Cannabis products are displayed on two walls and in the large, glass cashwrap. It’s easy for customers to get in, talk with the budtender, select the product they want and make their purchase.

Other than a couple billboards, including one directly across the street from the Seattle shop, Zips hasn’t invested a lot of resources in marketing. Zips doesn’t run ads in newspapers or culture magazines or spend money with companies like Weedmaps or Leafly. It doesn’t invest much energy in search engine optimization, social media or public relations.

“If that stuff worked, everybody would be doing it,” Tena says.

Instead, Tena believes good, old-fashioned word of mouth is the most effective way to bring in new customers. If people get good prices and have a good experience, they’ll tell their friends, he says.

Where Diego Pellicer was built on flash, Zips was built on function, letting the results and the experience speak for themselves.

“It’s about giving people what they want, when they want it,” Tena says. “Everyone walks out of here happy. That’s our objective.”

 

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