8 Tips on How to Start a CBD Ecommerce Business

In the past few years, CBD has been a hot topic of discussion. As CBD health benefits become more widely known, consumer interest in CBD is spiking: the retail market for CBD products in the United States is expected to hit $16 billion in 2025, a massive increase from $2 billion in 2018.

As you can see, there is a lot of hype around the CBD industry. That’s why many people are considering starting their own CBD ecommerce business, trying to capitalize on the popularity of CBD. No wonder - the world is becoming increasingly digital, and most stores and products have moved into the ecommerce space.

If you want to dip your toes in this industry, we have compiled some tips (8, to be exact) on how to start a CBD ecommerce business. We’ll talk about all of the things that come with starting your own company: finding suppliers, coming up with branding ideas, figuring out what type of product you want to sell.

If this sounds like something you're interested in checking out, keep reading!

 

Setting Up Your Ecommerce Business

If you’re considering starting your own CBD ecommerce business, here are few things you should keep in mind:

         i) Create a Thorough Business Plan

Every successful business begins with a well-thought-out plan. Your CBD business is no exception - it is vital to plan how you will manage it and be ready for any surprises that might come your way.

Here are a few things you should add to your plan for your CBD ecommerce business operations:

  • Market Analysis: A market analysis will let you understand the industry size, competitors, other market variables and your potential customers. This might take a bit of time, but it will allow you to make informed decisions on positioning your products and services, pricing and have a general idea of a go-to-market strategy.
  • Brand Name and Product Range: Your brand name and strategy define your business, so it’s essential to understand what lies at the core of your business and how you can set yourself apart from the competition. You need to also briefly describe your product range, focusing on the product quality and competitive parameters, to communicate the value of your product to your potential customers.
  • Determine your Finances: Estimate how much money you will need to start your CBD business operations. You’ll have to break them down as one-time pre-launch investments and ongoing monthly costs. Also, add contingency amounts for unplanned expenses because these will indeed happen.

         ii) Find a Reliable CBD Supplier

Finding a reliable CBD supplier is arguably the most critical step. If you are selling your products nationwide, you need to make sure that you are selling CBD derived from hemp and not from the cannabis plant.

Why? According to the 2018 Farm Bill, CBD derived from hemp contains less THC than 0.3 percent, making it legal throughout the United States. However, CBD derived from cannabis usually has more than 0.3 percent THC, making it illegal to trade and use.

Choose reputable wholesalers that do lab tests and provide certificates of analysis (COA), giving details of the content in the product, pesticide testing details, microbiological testing and residual solvents testing. This can help ensure that you are selling the best product to your customers.

         iii) Identify Your CBD Niche and Products

When starting your CBD ecommerce business, decide on what you want to sell. It can either be trendy or the classics. Assess the overall market prospects. Look into the general niches first. These can be:

  1. CBD-infused foods and drinks
  2. Supplements and wellness products
  3. CBD-based cosmetics
  4. CBD pet products

After you pick your niche (this is where that market research comes in handy), decide on your product types. Again, depending on the consumption method, the products range from drops and sprays, pills and capsules, CBD vapes and cartridges to tinctures, topicals, patches and CBD edibles. But, again, the choice is entirely yours – just keep your potential customers’ needs in mind.

          iv) Build Up Your Site

To get your CBD operations started, you need to customize your store design at the ecommerce platform of your choosing. Customers are drawn to use-to-use, aesthetically pleasing websites. So have a customized design instead of a blank canvas, with a simple website theme pre-mapping the final store look.

The most important thing you need to do when it comes to CBD ecommerce store design is to make sure that key product information is in a prominent spot. Of course, most of your customers will want to know the critical product specs: dosage/strength, hemp origin, extraction method and just some possible benefits.

CBD is still a somewhat new niche, so you expect to see an increase in the number of first-time buyers, so mind the navigation. Design your on-site navigation to accommodate these new customers, ensuring that their check-out process is as easy as possible.

         v) Determine Shipping and Payment Terms

According to the National Retail Federation, 75% of consumers expect free shipping when shopping online. That’s why when determining the shipping and payment terms, you should consider the threshold for free shipping.

Free shipping is a solid prompt to buy online for most, including CBD consumers. There’s a couple of ways you can do that:

  • Increase the overall price of the product to include shipping
  • Offer free shipping past a certain amount spent
  • Buy two or more items
  • Only offer shipping at certain times as a promotion

The other thing you will need to do is to select supporting shipping and fulfillment software. This software will assist you with setting shipping rates, manage logistics, print labels and auto-dispatch updates to your customers. This way, your life will be a little bit easier.

         vi) Understand the Laws and Regulations Around CBD

The commercial production of hemp in the United States was legalized in the 2018 Farm Bill, meaning that now you can grow industrial hemp and then legally sell products containing hemp-derived CBD across the country.

Despite that, it still has some restrictions. For example, CBD being sold must not contain more than 0.3% of THC, and CBD produced from cannabis are legal in 15 states for recreational cannabis usage and 6 states for medical use.

In a nutshell, you should know that selling CBD is legal as long as your products contain less than 0.3% THC. Still, selling CBD statewide can be tricky since the laws vary from state to state.

It’s always best to cross-check with a local legal specialist if there are any restrictions regarding CBD products sales.

         viii) Pick the Right Payment Processor

Although CBD is legal, many payment processors (such as PayPal) tend to avoid CBD transactions, as they are considered high-risk. This is why you need to find a suitable payment processor for your business by looking for a processor that supports both CBD transactions and has experience working with other CBD businesses.

What does that mean for your CBD business? First, you might be more susceptible to fraud and chargebacks. So, you have to look for a payment processor willing to take the associated risks and help ensure that your business follows all the CBD regulations and rules - as we do here at Merrco.

         vii) Market Your Business

Once your ecommerce store has been set up, the next step is to focus on getting customers to buy your products. But, first, you need to set yourself up with a solid marketing system.

You can do that by creating content that will educate the interested consumers in CBD and ensure they are not misinformed. This is important because CBD products are still vastly misunderstood due to unverified medical claims and online misinformation.

You should also leverage your SEO. It is not just about publishing content but publishing well-researched content that will help you dominate search engine results. This is where educating your customers can come in handy.

You should leverage social media too. Although advertising on social media platforms can be tricky (due to the sensitive nature of CBD), partnering up with influencers can lead to real growth for your business.

Much of CBD’s popularity comes as a result of patients’ advertising. So why shouldn’t you take advantage of the many celebrities who are outspoken and fans of CBD?

 

Conclusion

CBD is a fast-growing market, so it is essential to have the proper knowledge and approach if you are interested in getting involved with the space. You will need to supply your customers with quality products, educate them about the benefits of your product, keep up with the current marketing and ecommerce trends and choose a suitable payment processor to get all that sweet cash.

Sounds intimidating? Merrco has got you covered. We keep customers compliant in regulated industries, while giving you an edge over your competition with intelligent, simple payments that are tailor-made just for you!

Our payment experts have experience working with a wide range of businesses in different sectors. To learn how Merrco can help with your needs, enter your information using our "Get Started" form, and one of our experts will be in touch with you shortly.

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