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Feb 24, 2022 | 19 minute read
written by Kirsten Aebersold
The CBD market is booming, and the growth of eCommerce will only amplify it. Now is the time to build and launch a CBD online store. Learn how to build your website and get the top tips for boosting your CBD sales.
CBD is a budding business.The cannabidiol (CBD) market is booming but starting this post with a pun was unavoidable.
In a report released from the Brightfield Group, a company specializing in predictive consumer and market intelligence for the CBD and cannabis industries, they noted CBD sales are expected to reach $20 billion by 2022, with a compound annual growth rate of 147%. While forecasts aren’t set in stone, historical numbers can’t lie.
Ninety-seven percent of cannabis users primarily took CBD for chronic pain relief, while 50% of 100 respondents said they used CBD to reduce stress or anxiety. Looking at the same CBD usage statistics, 45% stated they took CBD to improve a sleep disorder, most commonly insomnia.
Numbers aside, it’s hard to miss the explosive growth and use of CBD products. People of all ages, backgrounds, and lifestyles seem to be avid consumers and it feels like almost everyone has experimented with various forms of CBD for one reason or another. It is truly becoming a mainstream component of today’s culture, which means there is a huge market opportunity for business owners.
Whether you’re already in the CBD business, or looking to break in, now is the time to launch your online store. For those with brick-and-mortar shops who might be wondering whether to expand, you honestly don’t have a choice. Taking an omni-channel approach to your CBD business will be the key driver behind continued success and growth, because if you don’t, your competitors will.
In the United States, sales of CBD in the e-commerce channel are forecast to increase from approximately two billion U.S. dollars in 2021 to more than six billion U.S. dollars by 2026.
The new shopping mindset of the consumer is pushing more companies than ever to turn their sights to the internet, and you don’t want to get left behind.
The passing of the 2018 Farm Bill federally legalized the production and sale of industrial hemp in the U.S., the plant where CBD derives. Legislation helped facilitate explosive growth in CBD products by reclassifying CBD and disassociating the compound from its cousin, THC, giving growers and businesses the ability to legally manufacture, sell, and ship hemp-derived products. This in turn gave consumers easier access to CBD, and as we know today, convenience in shopping is everything.
Positive public perception surrounding weed in general is on the rise with legislators on both sides of the aisle looking to support the full legalization of cannabis.
More than two in three Americans (68%) support legalizing marijuana, maintaining the record high level, according to a Gallup poll. The same research shows Democrats (83%) in support of full legalization, with Independents coming in at 71%, and Republicans on the fence at 50% supporting full legalization.
From recreational use to treating everyday anxiety and stress, or even alleviating the symptoms of more serious medical conditions like Parkinson’s or PTSD, the reasons for consuming CBD are expanding, and just as with any product, consumers like having options.
You can find CBD coffee shops as well as established spas offering CBD massages. Companies even sell CBD pet products. From CBD oil to gummies, chocolates, creams, supplements, vapes, or even chap stick and nasal spray, manufacturers and distributors are getting more creative with what products they’re infusing with CBD.
Nine million people started using CBD for the first time due to the pandemic; on average Americans spend an average of $20–$80 per month on CBD.
One in three American adults have used CBD oil, and over 66% of the population is familiar with the product. Moreover, about 40% are using it for chronic pain relief.
What does the average CBD oil user look like?20% of U.S. adults aged 18-29 personally use CBD products, with the percentages decreasing as the age groups progress.
An expanded customer base means more potential sales and opportunities for your CBD business, but it also means you need to find and define your ideal customer and product. The first step, however, is making sure your business is legal.
The answer to the question, “is it legal to sell CBD online?” is yes and no. If you’re looking to expand your existing company or are interested in starting an online CBD business, I’m sure we don’t have to tell you this, but we’ll restate it anyways – selling CBD oil or other products, online or in-store, is not the same as selling marijuana. They are different; marijuana is in fact still federally classified as a Schedule I narcotic by the Drug Enforcement Agency (DEA).
Without getting into the weeds, the high-level differentiation between the two is that the compound CBD is typically extracted from the hemp plant, while tetrahydrocannabinol (THC), is extracted from the cannabis plant. CBD contains minimal to no traces of THC and is non-psychoactive, so it does not affect the brain the same way that THC does (also, if you caught that last pun, I promise there are only one or two more).
While federally legal, CBD is still highly regulated both nationally and at the state level. The Farm Bill shifted oversight from the DEA to the Food and Drug Administration (FDA), which means there is a whole array of testing that needs to be done and labeling regulations that must be meticulously followed.
States also have the final say as to whether it’s legal to buy, possess, manufacture, or sell CBD products within their borders. Using hemp-based CBD for recreational or medicinal purposes remains illegal in in Idaho and Nebraska.
Finding a CBD distributor whose products comply with FDA regulations is vital, and just like your customers would expect to trust you as a business, you need to know you can trust your source. There are many components to a CBD business, and your distributor is just one piece of the puzzle.
So you’ve decided to dive in. You’ve researched how to sell CBD oil (or other CBD products), sculpted a business plan, and are now ready to build and launch your brand. There are several pieces you need in place to start selling and making revenue.
If you already own a CBD shop, you can skip ahead to part 2. If you’re just getting started and are looking at reselling CBD products that have already been manufactured or are interested in creating your own, you need a high-quality CBD supplier. There are a number in the market today, both U.S.-based and international that you can choose from.
Many wholesalers in the U.S. have been sourcing their CBD from Europe, where farmers have had years more experience in growing hemp, so sourcing from abroad is an option. With the 2018 Farm Bill in place, I would expect the national options to be on the rise.
Regardless, there are two key documents you’ll want to make sure any distributor has - the cGMP and COA.
The COA will also give you a detailed analysis and the percentage breakdown of the other components that might be found in the CBD, including heavy metals, pesticides used on the plant (sample below), and terpenes, an aromatic oil that is secreted from the plants (it’s what gives off that skunky or sweet smell). If you’re ever in doubt, you can always get a test run yourself. Neither you nor your customers should be surprised by what’s in your products and you don’t want to be responsible for health risks.
Source: AZWholeistic.com
Your online store will be your most powerful tool for driving revenue, so you’re going to want to make sure it’s aesthetically pleasing and user-friendly. Ecommerce platforms come in many shapes and offer a myriad of capabilities and features. There is no one-size-fits-all solution. You’ll want to pick one that meets your business requirements.
If you find yourself short of a web developer and need a solution that provides front-end themes, store templates, and other UI components out-of-the-box, companies like Shopify and BigCommerce might be a good choice. Platforms like these will also include other business critical features like shopping carts, but often provide flexibility when it comes to customizing.
If you want to provide a unique shopping experience tailored to your brand and consumer and have decided to go with a custom front-end, you will need an ecommerce solution that provides core services and features like shopping carts, checkout processes, and catalogue management. These pieces will have to tie seamlessly into your website and companies like Elastic Path or Commerce Tools will offer the type of solutions you’ll need.
Either way, an attractive website with easy-to-understand navigation and fast loading times will make your users’ journey convenient and frictionless, the key to a higher conversion for you.
With CBD being federally legal, you won’t face a lot of restrictions here, if you make sure you follow the guidelines of whoever you decide on using. The United States Postal Service has guidelines on shipping hemp-based products. UPS will carry your CBD products, just make sure you’re keeping tabs on what’s required.
Everything we’ve discussed so far is just the tip of the iceberg. Once you’ve guaranteed your CBD products are legal, built your website, and found funding, the real eCommerce challenges begin.
We just walked through a short overview of why these are important but finding a payment processor and merchant account for your company is probably one of the most frustrating parts of bringing your CBD business plan to life. Providers that specialize in helping ‘high-risk’ merchants usually have higher processing fees, more restrictions, and will give you less time to solve chargeback issues.
If you’re only selling CBD products online, you’ll have to choose a 3rd-party provider that will process payments for CBD goods out of the gate. If you sell other goods and have decided to expand your product catalogue to include CBD, you already have these systems and providers in place.
This means you may need more than one, and your back-end website logic will have to treat CBD products differently. You’ll have to handle any payment restrictions or limitations at the product-level. This will add a lot of complexity to your site architecture and will require a higher degree of customization in the back end.
The Best CBD Merchant Account Providers
CBD Payment Gateways
You’re at the mercy of whichever merchant account provider, eCommerce solution, or payment gateway you choose. It’s not unheard of for these companies to update their acceptable use policies on a whim and add new limitations to what their platforms can be used for. With CBD still a gray area legally, you’re pretty much always at risk of losing access.
Tip for Reducing Risk: Build a website that decouples your front end, or what the customer sees, from the back end and take a component-based approach to building your eCommerce experience. This is a technical tip but taking these steps will give you the flexibility you need to switch vendors quickly if needed and will give you complete control over your website.
What we mean by this is, don’t lock yourself into a single vendor that offers everything ‘out-of-the-box’ with a particular list of integrations they suggest using. Giving yourself options and flexibility will reduce the risk of you losing the ability to keep your business running.
If you’re selling a mix of products that aren’t just CBD-based, you need to make sure your online store can implement product-based shipping rules that will guarantee you stay within safe shipping zones depending on what’s in your customer’s cart.
Different taxes may also apply to different goods and depending on the state, so your shopping cart will need to be able to access the right data and apply it accordingly.
Earlier in this post, we talked a lot about the extensive market opportunity that CBD provides business owners and how the rise of ecommerce is geared up to support the continued growth of the industry.
Unfortunately, with opportunity like this, comes great competition. The ‘green-rush’ is very real. Everyone, from your next-door neighbor to your local coffee shop, gas station, and even multi-national organizations are looking to take advantage of this increase in market demand. Many pharmacies and retailers now carry CBD products. The good news is, it’s still not a reality to sell CBD products on major platforms like Amazon and eBay.
Tips for Beating the Competition: This is why it’s vital you build a trustworthy brand that consumers will love and follow. This starts with you providing a custom, customer-centric online experience. It’s like that saying where you have seven seconds to make a first impression. In this case, your website will have to do that for you.
Anyone’s initial thoughts on how to build awareness and beat the competition would be jump on the online advertising bandwagon. Sorry again, but you’ll face huge limitations here as well. Google and Facebook Ads will not run CBD ads. This means you can’t leverage some of today’s biggest consumer platforms to market your products, like Instagram, in the same way other retailers can.
This is a key reason you see brands vying for the attention and support of influencers, which, is a great tactic to explore. However, short of getting the Patriots’ tight end Rob Gronkowski to partner with you and publicly back your business and product, you’ll have to get a little more creative in how you advertise your business.
We’ve talked a lot about how your website will be the key to success for your CBD business. All aspects of your business will flow through that online portal and because you’re selling regulated goods, some aspects will be more difficult to manage. Here’s the three key attributes you should look for when building your eCommerce site:
You only get the true flexibility you need from an eCommerce site that has an API-based architecture that decouples your front-end from your back end. Yes, I’m talking about headless, but merely picking a headless solution isn’t enough - you need a headless approach that is also ‘services based’ (meaning each part of your eCommerce journey is a separate microservice component that can be assembled together).
We’re not talking about using a platform like BigCommerce, Salesforce, or Shopify that offer a form of ‘headless,’ where the APIs are bolted onto the infrastructure already in place, but about building CBD websites with a natively microservices-based back end completely built on APIs. This will enable you to create an eCommerce site with fit-for-purpose components and provide only the features you need.
You can learn more here, about why a headless approach to ecommerce is the best option for regulated or high-risk businesses. With Elastic Path you can easily manage complex back-end logic and alleviate many of the challenges you’ll have to face when building and launching your online CBD store.
Let us know if you want to learn more about how Elastic Path can help you launch and manage your CBD business.