Learn CBD: A Step-by-Step Guide for 2020
Here’s what you’ll find in this CBD Guide:
- CBD 101: Understanding CBD
- Legal Status of CBD
- Market Research & Competition Analysis
- Corporate Branding & Product Packaging
- UX/UI Design & Usability
- Picking the right e-commerce platform
- CBD Marketing
- CBD Glossary
Welcome to your CBD journey
We are witnessing a global phenomenon happening right before our eyes. Cannabidiol or CBD is a product that is growing in popularity not only in the US but all over the world. This is due to its medical and recreational properties recognized by many as a cure for their problems.
When it comes to numbers, there are many forecasts and studies predicting the CBD market in the US alone will reach somewhere around 15-20 billion by the year 2024. This massive growth is facilitated by the opportunities presented by modern technologies and the internet.
Nowadays, the Web is the place to be when you want to communicate and reach out to others. Everybody who wants to be a part of the CBD market boom has to utilize the online space most efficiently.
The competition is brutal so to be able to succeed in this environment you will need a well-thought-out plan, enthusiastic co-workers and employees, and experienced partners that will cover the areas you are not qualified to deal with.
If you are interested in what is necessary to start an online CBD business and how to make it successful – keep reading this guide.
1. CBD 101: Understanding CBD
The first thing you have to do before embarking on a journey of becoming a CBD entrepreneur is to understand the product you are about to sell. Otherwise, it will be hard for you to persuade anybody to buy it from you. There are many false beliefs about CBD, so you have to be able to know what these are and what the truth is.
Let’s start with an explanation of what CBD is. Cannabidiol or CBD is one of the many compounds found in cannabis plants. These compounds are also called cannabinoids. THC (tetrahydrocannabinol) is a cannabinoid, too. It is associated with the “high” effect of marijuana. CBD is not psychoactive, which is the major difference between both compounds. CBD will not get you high.
It is legal to sell CBD products throughout the states as long as they contain no more than 0.3% THC.
Note, if you want to be successful in the CBD niche and to avoid legal issues it’s best not to make any medical claims on your website, social posts, or other online places directly linked to your brand or you personally.
CBD comes in many different forms and is generally used for fighting anxiety, pain relief, and stress. If you are new to the market, it’s good to familiarize yourself with the different types of CBD products available, how these are used, and suggested dosage to recommend to your customers.
- ■ Capsules
This option usually comes in the form of gelatin or oil capsules. CBD capsules are easy and quick to use. Customers prefer using them due to these qualities.
- ■ Tinctures
An excellent choice for those who seek the fastest way to take CBD and experience its effects quickly. CBD tinctures are a concentrated extract made by natural hemp oil. The way these tinctures are used is by placing a few drops under the tongue as this gets absorbed faster into the body.
- ■ Isolates
Isolates have no color or flavor. These are usually added to foods and beverages as an ingredient. CBD isolate in its pure form is refined into a powder with no other substances.
- ■ Patches
Just like nicotine patches, CBD patches are used in a similar way, where the CBD is absorbed through the skin. This way, the substance is released gradually into the body during the day. This option is intended to help people that need to maintain a level of CBD in their body over long periods.
- ■ Edibles
Chocolate, cookies, gummies, candies, beverages – edibles are another form of CBD. Who doesn’t like a tasty treat? Especially if it contains CBD. Note that there are regulations in some states for selling food products with CBD. It would be good to research your local laws before selling any of these products.
- ■ Topical solutions
A CBD topical solution can be a cream, gel, lotion, salve, or any other type of ointment. These products are applied straight to inflamed and painful areas to provide relief. It is not uncommon for some of the products to include menthol or other ingredients that provide a cooling sensation.
- ■ Pet products
CBD pet products have become pretty popular recently. Many people that have pets suffering from chronic pain or anxiety buy these products in an attempt to provide some relief to their loved ones. CBD pet products are specially made to ensure your animals’ safety since they are more sensitive than humans. These products come in a large variety of flavors to make it more attractive to your furry friends.
- ■ Vaporizers/ Vape concentrates
Through inhalation, the CBD is absorbed straight into the lungs/bloodstream. This delivery method provides immediate results.
2. Legal Status of CBD
When starting a CBD business, it’s a good idea to research your local laws and regulations to make sure you are familiar with them. You need to have a clear understanding of what is allowed by law when considering your marketing strategy.
CBD products that are derived from industrial hemp can be sold online, but it is illegal to sell CBD products extracted from marijuana.
The passage of the 2018 Farm Bill that changed the status of the cannabis plant from a Schedule I narcotic to a regular crop doesn’t remove FDA’s role to regulate drugs, foods, dietary supplements, etc. Some states removed hemp from their list of controlled/banned substances and instead borrowed the position of the FDA in regards to selling hemp-derived CBD products. Other states banned the consumption and sale of CBD or reduced the types of CBD products that may be sold.
As an online CBD seller, you have to be fully aware of the laws in your state as well as the laws of the other states you are planning to sell to. This knowledge will save you a lot of trouble.
3. Market Research & Competition Analysis
After you’ve done your research on CBD, different types of CBD-containing products, and its legal status, then its time to move on to market research and competition analysis.
There are certain key points you have to consider before moving forward.
Who is your customer?
You have to create a Buyer Persona. This is your potential customer. The one that is most likely to buy your products. You have to consider things like age group, gender, interests, needs, and location.
Who are your competitors?
Find other online CBD sellers and study them. Which payment processors do they use? How is their website designed and structured? What products do they offer? How do they promote their business?
Learn as much as possible. This will help you to understand how the CBD business functions and what you have to do, to be a part of it.
What types of CBD products are you going to offer your customers?
As mentioned above, you can sell tinctures, edibles, isolates, patches, capsules, topical solutions, pet products, or vaporizers and concentrates on your online store. It’s good to figure out what you want to offer. Do you start slow with a couple of products or offer a larger catalog upfront to your customers?
How to choose a CBD supplier?
This is probably the most important decision you have to make when starting your online CBD business. The quality of your products will be affected by this choice. Not to mention your customers’ satisfaction and brand reputation.
There are many “fake” products in the stores, made of CBD derived from hemp seeds instead of the leaves and stalks of the plant. This leads to smaller amounts of cannabidiol in the products, which compromises its qualities. Some CBD companies even sell products that don’t have any CBD in them. It’s good to research and review their lab tests, or even better have your own tests done by a certified lab, to verify the potency of CBD they advertise. Find a manufacturer that produces high-quality CBD, and you will immediately separate yourself from the other players, offering poor quality products.
Here is a list of requirements your supplier should comply to:
- ■ The farm that your supplier gets hemp from has to produce high-quality crops. Some of the best hemp farmers in the world are based in the US and Europe. This is normal given the fact these countries have traditions in growing hemp for making products such as ropes and textiles. Do your research and find the origin of the hemp your supplier uses.
- ■ Cannabidiol can be extracted from industrial hemp in several ways. The best extraction method is CO2 extraction because the product left after processing is in a pure form. Other processes leave chemicals behind that contaminate the CBD oil. Seek suppliers that use this method of extraction. Also, require а certificate of analysis (CoA) from the supplier that shows the CBD, THC, and other substance levels in the product.
- ■ Avoid suppliers that make medical claims regarding CBD on their websites. CBD retailers and suppliers are not allowed to make medical claims, without any substantial proof or approval from the FDA to advertise these claims. When choosing a supplier, look for the FDA’s disclaimer on their website.
- ■ When it comes to price, remember: Avoid suppliers who sell CBD at extremely low prices. In most cases, the quality of the product is extremely low because of compromises the supplier makes. It is important to keep business costs low, and it is OK to do this as long as the quality of the product is not compromised. Learn as much as possible about the supplier before going into business with him.
Credit Card Processing for CBD
The CBD industry is considered high-risk due to certain federal restrictions, so finding a merchant account to accept credit cards can be tricky.
High-risk processors will do the job, but keep in mind that because there is additional risk involved, this option will increase the processing fees they charge compared to traditional processors.
Before choosing an online payment processor, check if it is compatible with the e-commerce platform your store is built on.
4. Corporate Branding & Product Packaging
The next things you have to turn your attention to is branding strategy and product packaging.
To create a successful branding strategy, you need to have a clear image of what it represents and its mission. Answering these questions will give you some clarity and guidance for building a brand strategy:
- ■ What are the strengths and weaknesses of your brand?
- ■ Who are your customers?
- ■ What opportunities does it present for your customers?
- ■ Who are your main competitors?
- ■ How is your brand different from the competition?
We’ve covered some of these items in the previous chapter.
This is not an easy thing to do all by yourself, so at any given moment you need help establishing your CBD business, don’t hesitate to contact us and share your CBD journey with us. We come from a small business background, so we speak the language, and we understand the challenges you face. We can also help you find the right resources to make the journey smooth.
You will need a logo that tells the story of your organization. Think carefully about the colors it will contain as later it will be used not only on your website but also on the packaging that goes out with every order.
Work closely with an experienced web designer to get the job done right. A professional will guide you through the process of creating a logo that will match your brand perfectly.
Colors are also important. Green, for example, communicates calmness. Brighter colors drive the attention of the customer to your product, which could be very beneficial on a store shelf. Consider where your products are going to be sold, and that can help guide you to the right combination of colors.
One more important piece of the puzzle – content. You will need large amounts of it, and you have to organize it properly so potential customer can easily find what they seek.
When you are at a point where you design packaging and labels, keep in mind that FDA has regulations you have to follow strictly; otherwise, you could find yourself in legal trouble. Your product labels should include:
– Identity statement
– Ingredient statement
– Nutrition statement
– Responsibility statement
– Net quantity of contents statement
For more accurate information, visit the FDA’s website.
5. UX/UI Design & Usability
Now that you have crafted a branding strategy and logo, It’s time to work on the website. To have a successful online business, you need a properly designed e-commerce site. It has to be responsive and to provide adequate User experience (UX).
UX is the perception your customer has after interacting with your website. To get more sales, your customers should be happy when using the site. It is important how they interact with it. Your job is to optimize this experience.
Here are some ideas on how to do this:
- ■ Menus should be simple and intuitive.
- ■ The architecture of the website should be consistent and guide your clients.
- ■ The text on the site should be easy to read.
- ■ Improve web performance by choosing a good hosting company and optimizing your products pictures. The faster your website loads, the better it is for your customers and your google rankings!
- ■ To avoid abandoned carts:
– allow “buy as a guest” option during checkout
– don’t demand as much data for your customers to enter
– the checkout process should include fewer steps.
A well-designed website will make it as easy as possible for your customers to find what they are looking for and to get through checkout quickly.
Next – the site must be responsive (optimized for mobile devices). Otherwise, it will be a total failure. The first reason is that the majority of people browsing the web are doing so mainly on mobile devices. The second reason is that Google uses the mobile version of your content for indexing and ranking (mobile-first indexing). Better ranking in Google means higher organic traffic and more sales.
To be responsive, your website has to be able to change its layout based on the specifications, such as the size of the display, of the user’s device. The images and text also have to fit the screen properly on which it is displayed. To make the browsing process smoother:
– Don’t use pop-up windows
– add an infinite scroll to make the navigation easier
– organize your information.
It is crucial to collaborate with professionals experienced in the CBD niche. They can provide support and guidance in creating a successful CBD e-commerce website because they are aware of the process, potential complications, and best practices in this industry.
6. Picking the right e-commerce platform
What is the best way to get your site up and running? There are two major options available – self-hosted and SaaS. Each of those has its benefits and disadvantages.
Your website is your storefront. As an entrepreneur, operating in a competitive environment such as the CBD industry, you can’t afford to have a poorly designed, mediocre website. That’s why you need to choose the best option for your online CBD store.
Option #1: Self-Hosted using WordPress and WooCommerce
A large percentage of sites today are built with WordPress. It is easy to use and comes fully featured with lots of commonly used functions. This platform is also scalable, which is important as you grow. You want to ensure you are not in a situation where a couple of years from now you have to move to a different platform, which can be very costly and result in lost customers or orders.
WooCommerce is an e-commerce platform specifically built for WordPress. It is a solid platform that offers loads of different options and can be highly customized. The combination of WordPress and WooCommerce can be powerful. The evidence for that is the long list of big e-commerce stores using this combo.
There is risk however in setting up your website without the help of web designers, especially if you are aiming towards creating a professional and successful e-commerce store. The process is complex, and it takes knowledge, experience, and the collective efforts of web designers, developers, and SEO experts to end up with a job well done.
To be successful in the online CBD market, you need a solid SEO plan, site speed, branding, and design. To take advantage of the WooCommerce/ WordPress combination, you need to work with someone familiar with the platform.
WordPress and WooCommerce can be a powerful combination, but in most cases, skilled web designers and developers are required to properly handle the task of creating a great CBD e-commerce website.
Option #2: SaaS platforms
SaaS or Software-as-a-Service is the second major option. These types of platforms combine all that is needed for running a CBD e-commerce business – tools, software, customer support.
Some of the world’s most successful brands are using SaaS e-commerce platforms – Sony, Toyota, Sharp Electronics, Ford, Old Spice, Dupont, Bulletproof, Budweiser, The Economist, Penguin Books, Tesla Motors, and Red Bull to name a few.
The focus is put not only on e-commerce but also on marketing and branding.
Creating, customizing, and optimizing your own CBD e-commerce website is made easier with these SaaS platforms.
At the same time, if you are a developer, there are plenty of options available to manipulate the platform so that it serves your vision on how the website should look and perform.
SaaS platforms offer templates and simplified tools so that anyone can create a website that works best for their business.
The only issue with SaaS e-commerce platforms is that you pay a monthly fee and don’t own the software. So if the company that offers this service shuts down for some reason, you would have to transfer your site over to another provider. Another concern with CBD products, some of these platforms don’t support this product type or if they do, they could change that policy later, so there is a much higher risk of having your website shutdown. In some cases you are at the mercy of the provider. If they choose to no longer support CBD products next week, you will get notice that they are closing your store. This is a risk factor you have to consider when selecting a provider.
In the case of WordPress/Woo commerce, those are both open-source, so you can do whatever you want with them, and there is no higher authority that can shut down your site due to a policy change.
As a CBD entrepreneur, you understand how crucial it is to get your site up and running quickly. Each day that goes by where you are not selling products is a missed opportunity. Your main goal should be to sell and get the money flowing ASAP. Consider that when deciding which platform you are going to use.
You can learn more about e-commerce platforms here.
7. CBD Marketing
In a highly competitive environment such as the CBD niche, you need to craft and implement a very potent marketing strategy to be able to end up as a success story, rather than a failure.
There is a range of proven marketing methods that when used efficiently, will get you there.
Search Engine Optimization (SEO) is essential for promoting your CBD e-commerce store. Its main function is to help the search engines (such as Google, Bing, Yahoo) to read your website, and learn what you sell. When it is properly optimized, your website will rank better in searches. This means that you will get more organic traffic. Keep in mind that SEO is an ongoing process, and it takes time to see results. But the outcomes are long-lasting.
If you want to get ahead of the competition, make sure your website is optimized for search engines.
#2 Content marketing
Content marketing is part of every successful SEO strategy. You need to provide quality content that will satisfy the interest of your website visitors as well as the search engines. Setting up a blog, where you can post articles is an efficient way to drive more traffic to your website.
Due to the FDA’s regulations mentioned in previous chapters, advertising on some ad platforms is a little tricky. Creating content that is useful to your audience could be the solution for that issue.
If you leverage content marketing, your CBD business will benefit in a major way.
#3 Building Your CBD Shop’s Mailing List
Email marketing is cheap and at the same time efficient. You need to build a mailing list, which will help you communicate directly with your clients and prospects. You can send monthly newsletters with content, informational and promotional pieces.
Remember that no one likes spam. Don’t overdo it, otherwise, your business will suffer the consequences.
#4 Business Directories
Promoting your business through online business directories is time-saving and at the same time inexpensive. It is a great way to increase your CBD business online presence. Utilizing this marketing method has some benefits like:
– increased link popularity
– increased visibility in search engines
– getting more targeted traffic
– your business will get more advertising exposure
#5 Social Media
You can use social media to grow your audience and make your brand more recognizable. Platforms such as Facebook, Instagram, Twitter, Pinterest, and Vine can be powerful allies if you tap into their potential. Remember, that you can’t advertise your CBD business via paid ads (the rules set by these platforms forbid that). Also, don’t make any health-related claims. FDA is watching you!
You can bypass all these restrictions by being smart and finding alternative ways of using Social Media.
#6 Affiliate Marketing
An affiliate program essentially gives you access to salespeople around the world. Those affiliate marketers can add links to your CBD store on their sites, blogs, email newsletters or even YouTube channels. If someone clicks an affiliate’s link and buys a product, you’ll pay the affiliate a portion of your revenue.
Running a successful CBD affiliate program is a huge topic and can be discussed in an article on its own. However, we can provide a few pointers to help you get started:
– Find influencers whose audience is the one you target. Create a list and reach them one by one with an offer.
– Cultivate strong relationships with your affiliates. Good communication is the key to a successful partnership.
– Support them with a good commission. Engage them in different ways, so that they can understand your brand and promote it effectively.
– Provide your partners with banner ads, text ads, and content.
– Create guidelines for the affiliates to follow. Explain your brand mission and how you expect it to be represented.
#7 Don’t Neglect the Value of Offline Marketing
No matter how much time you spend on digital marketing, you should never allow yourself to become so busy in the online realm that you neglect your offline marketing efforts. While digital marketing is undeniably crucial, marketing in person and via physical media will always remain important, as it can produce results relatively quickly and it can increase engagement and traffic to your online and social properties.
8. CBD Glossary
To navigate in the CBD and hemp industry, you need to get familiar with the terms that are being used widely by manufacturers, resellers, customers, and marketers. We put a shortlist with the most common terms used in the CBD space, check them out below:
Cannabidiol (CBD) – one of the most important components with a wide range of therapeutic application, extracted from the cannabis plant (Cannabis sativa).
THC (∆9-ТНС – Delta-9-Tetrahydrocannabinol) – the psychoactive component of the cannabis plant. This is what gets you high.
Full Spectrum – contains all other cannabinoids found in the cannabis plant.
Isolate – crystalline powder containing pure CBD (99%+). It contains only CBD and no other cannabinoids.
Bioavailability – defined as the quantity of the unchanged drug that reaches the bloodstream no matter the way the drug is being taken.
Endocannabinoid System – the system in the body that produces and utilizes the cannabinoids produced by the body or consumed by you.
Entourage Effect – cannabinoids can increase the effects of each other when taken together.