According to recent research by HempBiz Journal, the CBD (cannabidiol) market in the US is expected to grow to over $2.1 billion by the year 2020, with over $1.3 billion coming from hemp-based CBD products.
With such profitable numbers being thrown around, it is no surprise that many entrepreneurs are currently attempting to enter the CBD industry. However, for first-time cannabis entrepreneurs, navigating through the complex modern marijuana industry can be difficult. In this industry, it can be very simple to make very big mistakes. Keep reading to find out what we consider to be the most important factors for successfully selling CBD online.
Finding A Good Supplier
The two most important considerations when finding a supplier or wholesaler are product quality and price. High-quality suppliers will grow their hemp in clean soil, extract its contents using clean methods, provide proof of product quality, and sell to you at reasonable prices.
The location that CBD is sourced from will have a significant impact on the quality of the final product. Hemp is considered to be a ‘bioaccumulator’ because of its remarkable ability to absorb whatever is in the soil it is grown in, including toxins. As such, quality CBD will be grown in clean soil using clean farming practices. If a wholesaler is growing their own hemp, try to do as much research on their growing and extraction methods as possible.
There are various different ways of extracting CBD from cannabis. The cheaper methods utilize petroleum-based chemicals such as butane or even propane, whereas the more expensive and time-consuming method utilizes CO2 gas. Many times, dirty extraction methods will leave behind traces of these petroleum-based chemicals that are potentially harmful. You should always try to purchase CBD that has been extracted using clean methods, if possible.
Look for a wholesaler that can provide you with a Certificate of Analysis (COA) for their product. This certificate should contain the cannabinoid percentages and purity of your final product. Dealing with a supplier that provides COAS will save you the time and money of having to conduct third-party lab testing.
Ideally, you want to find a wholesaler whose price structure allows you to maximize profit. However, beware of super low-priced CBD. You get what you pay for, and if you don’t pay much, you will most likely get some low-grade CBD potentially carrying toxins or bacteria.
Be Aware of Federal and State Regulations
As of December 2018, CBD products extracted from hemp, and containing no more than 0.3% THC, became legal at the federal level. As long as the 0.3% threshold is met, CBD products can be sold in any form such as oils, capsules, or edibles.
The majority of CBD extracted from cannabis plants exceeds this 0.3% threshold. As such, you should avoid buying cannabis-derived CBD whenever possible. Otherwise, make sure to educate yourself on cannabinoids testing methods so that you can test the legality of your product before putting it on the market.
Be careful when making health claims about CBD products. Try to avoid using words like “prevent” or “cure” when it comes to medical diseases. Doing so could get you in trouble since CBD health claims have not been verified by FDA-approved research.
Additionally, it is always a good idea to consult a lawyer before launching your business. They will help you to navigate federal and local state regulations that may affect your ability to do business.
Develop An Effective Business Plan
A business plan is essentially a roadmap for your business. It should effectively detail exactly how the business intends to turn a profit.
A good business plan will analyze customer and market trends, financing methods, a marketing plan, a long-term business strategy, and a short-term implementation strategy.
Deciding which products you will be selling and to whom you will be selling them is the most important part of a business plan. Be sure to analyze local market forces to determine the spending ability of potential customers. Moreover, you should carefully analyze industry competitiveness so as to determine the viability of your business model at this point in time.
Carefully consider your financing methods and sales forecasts. If the numbers don’t match up, you could find your online business going under rather quickly. It is always a good idea to revise these numbers whenever new data makes it necessary to do so.
You should also stop to consider if your marketing plan falls in line with your budget and financing. How will you market your store? and, how much will it cost? You will have to answer these questions in order to determine the viability of any marketing strategy. While overspending on marketing during the first few months of a startup’s life is a fairly common tactic, you must develop a marketing plan that will not break the bank in the long run.
Keep an eye on your long-term strategy. As things change in real-time, you will need to update your strategy in order to make sure it stays viable. Strategy models can be more flexible than most people think. Most importantly, don’t hesitate to modify or abandon a bad strategy if it is not working.
If you are selling CBD online, you are obviously doing so through some kind of online store. Making sure that your website is optimized for search engine optimization will allow people to find you easier. Additionally, generating written or video content for your store’s website will not only help with optimization, but also with customer engagement, and brand building.
Develop A Strong Brand
Lastly, don’t forget brand development!
Establishing a strong brand that delivers on its promises will separate you from the competition.
Since the modern world of cannabis has become so complex, education has become a key component of sales and branding. By educating your website’s visitors on the uses and benefits of CBD (or marijuana) you can position your brand as one that helps people. By extending the value of your business beyond just products and sales, you can build brand equity and brand value over time.
Be careful to position your messaging and communication so as to give the impression that you are a consumer advocate. Ideally, you want your customers to think of you as more than just a CBD store.
One way to effectively build your brand is through social media. A recent survey conducted by Instagram indicated that roughly 50% of Instagram users have followed a business page on the platform, and over 60% said that they had discovered a brand or product through the platform. Nowadays, establishing a social media presence is essential to capturing as many leads as possible in the digital marketplace.