Enshitiffication: Cannabis’ Dirty Little Secret

This recently coined, commercial phenomenon describes the quality & service decline of online products over time. Some of culprits include Netflix, Airbnb, Facebook and Uber.

Enshitiffication unfolds this way...

Companies will introduce high-quality products and services to generate hype, secure distribution and entice consumers. Success will follow. Over time, management will steadily degrade the value of these offerings to reduce cost, better appeal to other segments or prioritize market share.

We also, unfortunately, see enshitiffication actions in every cannabis market, and among producers, resellers and retailers.

For example, producers will: substitute lower-quality fertilizer, packaging and genetics; scale back customer service and; dump old or inferior product (as if standard) into the channel.

Ethical lapses are also characteristic of this short-sighted corporate strategy. Some of these behaviours include lab shopping for better COA results; using banned pesticides to maximize yields and; pursuing illegal listing practices (e.g., data deals)

Many firms experience cultural dissonance when marketing inferior products and services. More importantly, they face significant market risk.

Enshitiffication is customer satisfaction death by a thousand cuts. It leads to an erosion of consumer and channel trust - if not market share. In Canada, enshitiffication is likely one of the causes for a 13% yoy decline in the aggregate market share of the top 5 LPs - a trend that has been afoot for years.

Most canna-businesses don’t want to shoot themselves in the foot. However, cutting corners is too easy when you are trying to cope with margin compression, a lack of profits and onerous regulations in what is essentially a commodity-like sector.

Firms also don’t help their mission by having a poor understanding of the consumer & competition as well as a narrow view of differentiation and consumer value.

Avoiding bad habits

1. Focus your efforts

Enshitiffication activities hide poor strategic decision making. Concentrate your efforts and capital on a small number of core markets, winning products and SKUs.

2. Apply smart cost control

There is a good and bad way to reduce cost. Don’t take out cost that directly contributes to your value proposition or point of difference.

3. Live your values (if you have them)

‘North Star’ organizational values like quality, innovation or service will guide and inspire your team through difficult periods and decisions.

4. Look for unsatisfied consumers

Your competition may be dropping the consumer ball with their enshitiffication tactics. Savvy operators will find this new ‘white space’ and tailor their products to fill unmet consumer needs.

Call me. I can help your team improve product-market fit and brand profitability.

#operations #productmanagement #enshitiffication #LPS #MSOS #brands #products