Your brand is a story that can be told in text, color, scent, music, touch and taste. Use all of those options to create a complete story that continues to engage your customer.
As part of our series about the future of retail, I had the pleasure of interviewing Alen Nguyen.
Alen Nguyen co-founded MainStem in 2014 to solve supply chain and product distribution for ancillary products in the cannabis industry. As its Chief Executive Officer, Alen has seen MainStem become the leading B2B e-commerce marketplace and integrated supply purchasing platform for cannabis companies across the U.S. over the past seven years.
After obtaining his Electrical Engineering degree from the University of Washington and working within the aerospace industry near Seattle, Alen quickly realized his true passion lay on the business end of the spectrum and procured an MBA in Entrepreneurial Studies from Embry-Riddle Aeronautical University in 2013.
His time in aerospace helped Alen identify the gap between the commercial cannabis supply chain and product distribution that ultimately paved the way for the creation of MainStem as a better way to connect cannabis businesses directly with suppliers.
The need to build cannabis infrastructure from ground zero provided an opportunity to explore how highly regulated but still fragmented systems could fit together on a macro level. This pursuit eventually made MainStem the industry’s leading purchasing platform, providing access to more than 12,000 products from over 485 brands to thousands of customers across the United States.
When he’s not developing solutions to some of the cannabis industry’s biggest issues Alen can be found spending time with his wife and three children.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?
A Vietnamese immigrant, my dad told me I had to be a lawyer, doctor, or an engineer. I decided on engineering. I graduated from the University of Washington as an engineer, got a job, and hated it. Every bit of it. I couldn’t work in a cubicle, move at such a slow pace, I did not want my life to be like that.
I made the switch over to business and I was hooked. I went back to school in the evenings and got my MBA while working full time, traveling, and raising two children under the age of two at home. It was challenging, but I knew then what I was capable of.
After my MBA, I worked in the aerospace industry and was really struck by how inefficient everything was. I knew I could do it better. I tried starting an aerospace company of my own but it required more capital than I had access to at the time. Then this cannabis thing came up. My cofounder, who is my cousin, was a medical cannabis grower at the time and he urged me to take a look at his industry. I hadn’t really touched cannabis since college and hadn’t paid attention to what was going on.
When I looked into it, I saw that I had an opportunity to build something from the ground up, and that was too much for my business compass to pass up. But I had to be morally OK with it as well. I learned as much as I could about cannabis and discovered what many people already know about the great medical and recreational therapeutic benefits of the plant. And, while I didn’t personally consume cannabis, I was amazed at how it was really helping people yet still illegal in most of the world. That put my moral compass in line with my business compass — so I decided to go all in.
Can you share the most interesting story that happened to you since you started your career?
Frankly, the most interesting thing I have done in my career is becoming a cannabis industry business owner. Coming from a more traditional corporate world into the wild west of cannabis was a true eye-opener for me.
When I made the transition from employee to entrepreneur there were a lot of things that I didn’t know but I knew I had to learn everything very quickly. I was confident in my business abilities to launch a company as I had grown businesses as an employee. What caught me completely off guard as an entrepreneur were all the things I had taken for granted as an employee. Suddenly, had to learn accounting, IT, HR, and even a little marketing — which has always seemed like black magic to me. During the day I worked hard on new business; at night, I learned how to do all the administrative things that needed attention. My first lesson was to either budget for outsourcing these tasks or learn how to do them yourself — fast. It gave me a whole new respect for business owners, and is a good reminder that being your own boss is definitely not as easy as it looks from the perspective of an employee.
Are you working on any new exciting projects now? How do you think that might help people?
We are concentrating a lot of in-house intelligence on the data that our work produces because it is loaded with information. Data tells stories about what’s happening right now and points to future stories our clients will need to know. For example, we’re seeing how the rise of Multi-State Operators and Single-State Operators through mergers and acquisitions is changing the cannabis industry from the inside out. As we’re inching closer towards federal legalization, we are seeing larger companies starting to eye the industry — everyone is fighting over market share. The goal is to get as much market share as possible so that when companies like Apple and Amazon come into the cannabis space, they’ll buy the largest businesses standing.
None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful, who helped get you to where you are? Can you share a story?
My uncle. I was a bit lost as a teenager. My parents had divorced and my home life was a mess. At age 19, I moved to Seattle and my uncle took me in. I took five years off between high school and college because I didn’t know who I was or what I was going to do. My uncle showed me what “real” life was going to be like by getting me a very hard labor job, and a very special woman believed in me and showed me what I was capable of doing. That woman is now my wife. Between the two of them believing in me, my life took off. I worked 72 hours a week while putting myself through college. I knew I was five years behind everyone else, and had to work harder, faster, and better than everyone else in every area of my life in order to catch up. That mentality still lives with me today.
How have you used your success to bring goodness to the world?
Because my own childhood and adolescence experiences aren’t what I would wish on anyone, I have made a commitment to be a mentor. I currently mentor two ninth grade boys, meeting with them regularly for a study session or to grab a burger — or whatever they need and want to do that day. Everyone needs to have an interested adult in their lives who can help guide them at times and not every parent is always available to do that. I didn’t know what to expect when I started and I’m blown away by these kids. Their aspirations and goals are so far beyond what I might have imagined at their age. I’m learning so much from them and am honored to be able to extend the lessons and hope that my uncle gave me to them through this mentorship.
Ok super. Now let’s jump to the main questions of our interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share a few examples of different ideas that large retail outlets are implementing to adapt to the new realities created by the Pandemic?
The compliant U.S. cannabis industry depends on Asia for most components other than the cannabis itself, and so has always done its shopping online — often on Amazon. What’s different about what we bring to the experience is how we work with our clients, using a concierge-style service that helps them identify the best provider from the largest possible network available.
Unlike the large retail outlets, we personalize our platform so our customers have a 360-window into their options. We allow procurement officers to add their own preferred suppliers if they’re not already in our system, individualizing it for their needs. Our software allows customers to leverage all purchase decisions and communications through a single log-in and dashboard for the full business day. By integrating with all their existing tech stack, including their communication tools and accounting software, we help everything stay streamlined and connected so they have full visibility across their procurement workflows. Working under the MainStem umbrella, they can truly manage their spend and make smart, data-driven business decisions.
Amazon only shows you options that are already in their network, not the network itself. We work across multiple distributors and offer actual best pricing — not just what we want to put in front of you. We have also made the commitment to not take a cut from our vendors. We negotiate the best pricing by aggregating buyer demand and add a margin. We help vendors add an additional revenue stream.
The supply chain crisis is another outgrowth of the pandemic. Can you share a few examples of what retailers are doing to pivot because of the bottlenecks caused by the supply chain crisis?
Our industry is fascinating for many reasons, but particularly because it’s so new. That leads to innovation, of course, but it also means that the learning curves are huge. One of the most important things we do is to help cannabis companies understand the importance of planning ahead, just as traditional CPG firms do, so that supply chain bottlenecks aren’t as impactful.
Cannabis, because it doesn’t yet have access to ordinary business credit or other financial tools available to nearly every other industry, often works on extremely slim margins that don’t allow companies to make the investment necessary to keep enough stock on hand. We help them understand what the ramifications of that are and see the fullness of options available in order to avoid bottlenecks and slowdowns.
How do you think we should reimagine our supply chain to prevent this from happening again in the future?
Flexibility and diversification need to be a big part of rebuilding a reliable and robust supply chain infrastructure that can support the increasing consumer demand of the 21st century.
As we have seen over the past two years, the pandemic has exposed the flawed foundation of the current global supply chain. As consumer demand increases, due to the rise of eCommerce and shorter product lifecycles, the foundation of the supply chain has not scaled quickly enough to meet the demand. Port capacity has not increased to match the number of overseas shipments, there are shortages of transport labor, and even a lack of shipping containers. The system was stressed before the pandemic, so once the complexities of quarantining, labor shortages at both ends of the chain, and global lockdowns were added, the fractures began to show. With multiple industries relying on the same stressed system, the impact of the breakdown has a significant ripple effect across the consumer sector.
In order to build a more resilient supply chain, the U.S. is already investing in fixing its outdated infrastructure to match the growing consumer demand. President Biden’s Infrastructure bill includes accommodations for port and roadway upgrades. But this only solves part of the problem, since labor shortages are also impacting the supply chain. Finding ways to attract and retain a strong supply chain workforce will also need to be addressed.
Diversification is another big opportunity. Our reliance on overseas manufacturing and shipping has amplified the problems and will need to be considered moving forward. While the U.S. cannot directly compete with the competitive labor costs and mature infrastructure of overseas manufacturing, building viable optionality and redundancy into our sourcing will help offset future disruptions and provide alternative avenues of supply chain management.
In your opinion, will retail stores or malls continue to exist? How would you articulate the role of physical retail spaces at a time when online commerce platforms like Amazon Prime or Instacart can deliver the same day or the next day?
Retail stores will. Malls, maybe not — and I don’t see that as a necessarily bad thing. Small businesses and local merchants are important to the character of our towns and cities. They were initially eclipsed by the rise of the mall and survived, so I don’t anticipate they’ll go away. We probably will see a more dramatic dissolution of the small pharmacist or the beauty supply retailer, those micro-merchants who sell very specific products that are easily available online — but the browsing experience, the opportunity to touch and try things out before purchase — are deeply embedded in us as humans.
What will go away is cash. Touchless pre-payment for everything will continue to gain traction. Cannabis retail in particular had an aha moment at the start of the pandemic when it was largely deemed “essential” in those states where it is legal. Those retailers who aggressively updated their eCommerce platforms and pursued curbside pick-up and delivery are the ones who found their profits soaring as their customer base hunkered down for the duration. Being able to take payment in a touchless manner became incredibly important as did the ability to bring products right to the consumer. We saw a huge leap forward for cannabis retail that would have eventually occurred but which the pandemic forced to happen at a quick step.
The so-called “Retail Apocalypse” has been going on for about a decade. While many retailers are struggling, some retailers, like Lululemon, Kroger, and Costco are quite profitable. Can you share a few lessons that other retailers can learn from the success of profitable retailers?
Creating a brand experience that excites and energizes the customer has never been more important. Those brands that figure out ways to lure the customer back into the store will have an advantage even as they continue to discover how to serve them at home.
Amazon is going to exert pressure on all of retail for the foreseeable future. New direct-to-consumer companies based in China offer prices that are much cheaper than U.S. and European brands. What would you advise to retail companies and e-commerce companies, for them to be successful in the face of such strong competition?
Amazon is always going to be the elephant in the room, and their highly convenient customer service model works extraordinarily well for them. However, we can’t discount the importance of brand reputation, especially when we look at the buying decisions on the up-and-coming Gen Z consumer. Retailers might not be able to directly compete with the Amazons of the world on price and convenience, but they can win in different ways.
Younger consumers are increasingly making purchasing decisions based on ethical factors like sustainability, social equity, and social impact. Establishing a firm and authentic brand identity that resonates with your customers builds a more personalized retail experience and creates brand loyalty that can help combat the threat of larger, impersonal corporations. There is tremendous value in connecting with your consumer on a deeper level. This philosophy is working out well for cannabis companies. We are seeing brand identity investment that creates a real and unique experience for consumers having a positive impact on market share in a very noisy market.
Based on your experience and success, what are the five most important things one should know in order to create a fantastic retail experience that keeps bringing customers back for more? Please share a story or an example for each.
This is not exactly my area of expertise, so I turned to my VP of Marketing, Andrea Sampson, for advice. What she told me was invigorating!
- Story. Your brand is a story that can be told in text, color, scent, music, touch and taste. Use all of those options to create a complete story that continues to engage your customer. I’m aware of an airport-themed dispensary that uses the concept of “flight” in every possible way — the retail space looks like it’s placed inside a small regional airport — but primarily to play with the term “high” so prevalent in cannabis and to encourage its customers to aim for the sky through achievement.
- Design. Your retail space says everything about your brand and is such an important opportunity to build community around your brand. It should invite and be comfortable. Customers should feel like they don’t want to leave. Importing learnings from other industries is helpful. I think of a large successful vertical in the Midwest whose retail director formerly worked at a mega-chain that caters to Gen Z. Translating that aesthetic to a dispensary resulted in a high-energy space with plenty of light and empty space and attractive, inviting furnishings that could actually be used. You might forget you’re even in a dispensary.
- Surprise and Delight. Is there a discount that can be appended at the register, a way that employees can be trained to interact with guests, a coupon or sticker that can be tucked into the bag at purchase? A dispensary near my Seattle home is known to add a small bag of goodies — a single packaged infused cookie, a sole can of an infused beverage, a pre-roll — to purchases over $100.
- Variety. The large Midwestern outlet I mentioned above might specialize in selling cannabis flower, concentrates, and infused products but it also sells books, jewelry, vases, buttons, T-shirts, hoodies — a full range of merchandise that is entirely cannabis-free. Unique and unusual items are found everywhere, making a visit to one of their dispensaries a small voyage of discovery.
- Point of View. If you like to shop at all, you know that you’re more comfortable in some establishments than in others. Having a specific point of view is so helpful to encourage customers to feel aligned with and understood by your brand.
At the heart of all of these experiences is data. Using data to truly understand your customers helps you personalize the retail experience. Whether it is choosing the right music for your dispensary or using loyalty data to build a high-touch customer service experience, being able to make actionable decisions based on consumer insights takes the retail experience to the next level. This is something traditional industries understand, and that cannabis businesses are just now beginning to leverage to make their customer experience truly unique.
Thank you for all of that. We are nearly done. Here is our final ‘meaty’ question. You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
I’m really invested in the values of diversity and culture. As a person of mixed heritage who has lived through my own ups and downs, I’ve come to really understand that there are so many people who could bring tremendous value to humanity and our society if only they could make their voices heard. Many of these people never get an opportunity — via education, employment, financing, etc. — to make that positive impact because they are constrained by their own situations. I intend to work towards helping folks of different racial and economic backgrounds obtain the means of getting that platform to share their voice so they can provide their own unique value to our communities.
How can our readers further follow your work?
Our website is always evolving at mainstem.io and I am active when I can be on LinkedIn.
This was very inspiring. Thank you so much for joining us!
Alen Nguyen On The Supply Chain and The Future Of Retail was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.