The global CBD industry is thought to be worth $4.9 billion, with predictions for it to reach $47 billion by 2028, highlighting the vast levels of growth in what is known as the ‘green rush’.
The USA and the UK have been leading the way with the CBD markets, but plenty of other nations are playing catch-up.
So if you’re looking to get involved and setup your own dropshipping business, then hopefully this guide will help you.
What Is Dropshipping?
Dropshipping is a business or a person that sells products without keeping the stock. Basically, you won’t need a warehouse full of CBD products, so you won’t have to worry about fulfilling the logistical aspect.
Nowadays, there are a number of dropshipping websites where they advertise products for other brands, people make the order and that gets fed straight through to the manufacturer.
Not having to keep products in stock also means your costs can be drastically lower, however you also have to consider carefully the agreed profit margin and whether this covers your costs.
Is Dropshipping Safe?
Dropshipping is a common e-commerce business setup, however there are inevitable legal issues you must consider.
Make sure to protect yourself with the Dropshipping Agreement Contract, which is a legally binding agreement between the seller and the manufacturer of goods.
These contracts can be adjusted, so they include both parties rights and responsibilities, so make sure to read up on anything they might draft up or create your own if they don’t provide one.
Make sure to include prices, delivery standards & conditions and defect rectification & return policies.
The biggest risk you face is around unreliable shipping partners letting you down when you’ve done all the hard work to bring in potential customers. Your reputation is on the line, your website will receive the negative review and the customer won’t be coming back or will bad-mouth your business to others, so you’re on the front line.
What Are The Benefits Of Dropshipping?
There are a number of advantages to adopting a dropshipping method to your business, which I will highlight below:
- Lower Startup Costs – Honestly, you could build the website relatively quickly, you won’t need to invest hundreds of thousands on developing the product line and you won’t need a set premises. For this reason, the startup costs of your business are minimal compared to most, which is why many people setup dropshipping businesses from their home and see significant profits.
- Scalability – If you want to increase the size of a business, you may need a bigger office or a bigger warehouse, you will have to employ more people or will have a greater logistical situation on your hands. However, with a dropshipping business, you can very easily scale up without many of these factors being involved. If you want more sales, just work on your SEO and bang, the work is done!
- Wide Range Of Product Offerings – Let’s say you start off by advertising CBD oils and gummies, but after a while you want to introduce merchandise, mushrooms or infused tea’s, well all you need to do is write up some content, create a new landing page and set it live. You can broaden out your product range very quickly, advertising multiple brands through your website.
What Are The Negatives Of Launching A Dropshipping Business?
- Low profit margins – This will largely depend on the deal you manage to arrange with the companies you partner with, however the profit margins might be lower than you’d like. Let’s say you arrange a 30% profit margin on a CBD oil, costing £50, meaning you will make £15 from each sale. But your running costs are £5 per product, not to mention you run some Facebook and Google ads, costing £5 per product, well that means you’ve made £5 profit. So how many will you need to sell in order to make enough profit for your business to thrive?
- Highly competitive – You’re not the only one who has had this great business idea, hence why the search volume for ‘CBD dropshipping’ is so high. In fact, I’ve worked with a large number of CBD dropshipping businesses, who are all competing for the same market. You’re also competing with the brands themselves, so expect a tough fight on your hands for those clicks.
- Supply chain issues – Your reputation is on the line and you have no real control of the supply chain, meaning if a brand repeatedly delivers products late or damaged, people will stop shopping on your website, despite it not being your fault. In fact, you might find yourself out of pocket with these refunds, so it can be quite frustrating if dealing with incompetent suppliers.
- Building a brand – Becoming a recognisable brand in the industry and getting yourself in front of potential customers is both incredibly difficult and expensive. From writing all the content on the website, to running ads and building your organic rankings, it will take time and money to get where you want to be.
How Does Dropshipping Work?
The concept is relatively simple, someone will come across a product page on your website, whether that’s through a paid ad, organic traffic from a search engine, direct traffic, email marketing or some other source.
They will then place an order for the product, which will then be fed directly through to the supplier for them to fulfil.
Once the payment has gone through, you will get the margin agreed with the supplier, e.g. 30%.
Why Is Dropshipping CBD Difficult?
One of the biggest issues is around the regulations in the CBD industry. Every country has different rules, while in the USA there are different rules depending on what State someone orders your products.
This all comes down to the quantity of THC present in the product, while different countries have different rules on the quantity of THC they allow, with some countries not allowing any at all, meaning you could only sell isolates, or some won’t allow CBD products full-stop.
Some other countries require a minimum age for CBD product orders, whether that’s 18 or 21, therefore you will need a pop-up asking whether they are that age before being able to carry on with the website.
These pop-ups are very easy to add, normally via a plugin which shouldn’t cost anything.
What CBD Product Categories Should I Include?
There are a number of different category sections you can build onto your dropshipping website, which I will cover below:
- CBD oil – this is the hero product and probably the area you should focus the most on. CBD oils are the most common consumption method currently, while they should bring in your greatest number of sales.
- Vaping – While I’m personally not a massive fan of vaping, it would be ridiculous to not recommend this for a CBD dropshipping website, as they’re hugely popular and a growing area. You should be quite careful about the product quality before making a deal with a supplier for obvious legal reasons.
- Skincare – Whether it’s a moisturiser, serum, toner, exfoliator, essence, under eye cream or body lotion, we’re seeing a huge jump in beauty products containing cannabidiol. These have an increasing search volume, while the competition for rankings isn’t as intense as it is for CBD oil.
- Capsules & Tablets – I’m not a fan of swallowing capsules or tablets, while I’m also a little dubious around CBD capsules, considering the requirement for sublingual consumption, but they exist in the market for people who want all their CBD in a single hit, without tasting it.
- Edibles – Whether we’re talking about gummies, chewing gum, chocolates or cookies, there seems to be a growing selection of edible options and they all taste amazing!
- Muscle Creams – These could technically come under ‘skincare’, as they’re a topical treatment, but I feel they’re slightly differently focused, as it’s not a beauty item, it’s focused on recovering muscles or injury recovery.
- Drinks – Back a couple of years ago, the drinks all contained 5mg of CBD, not much at all, however now they’re starting to offer stronger options.
- Pastes – These aren’t very common, yet I find the results work really well, plus they tend to be much higher in other cannabinoids.
- Protein – This will only be relevant if you work with CBD brands that have a whey protein based product, but these are starting to pop-up.
- Other Cannabinoids – While CBD and THC are the most well know, we’re starting to see a growth of interest into other cannabinoids, whether that’s CBG, CBN or CBC, with oils coming out high in these cannabinoids.
Important Inclusions On The Product Page
Once you’ve started building your website and arranged some deals with suppliers, you will need to start loading some content onto the product pages.
But unlike other e-commerce websites, you will need to include some other key information that you might not automatically assume, so I wanted to highlight these below:
- Lab Reports – You should get a lab report for the products you’re selling, highlighted for the related batch (not a lab report for a product selection from a few years ago). These should be easy to find on the product page, while you might want a separate tab in the top nav that takes you through to a page where you list all the lab reports.
- Dosage Recommendations – Many people who take CBD oil are doing so for the first time and they will find the dosages very confusing, so you should make sure to provide thorough dosage recommendations.
- Hemp Source – Where was the hemp sourced? This is an important question to answer in order to assure potential customers, while I wouldn’t trust a brand if they refused to disclose this information. I’m not talking about the exact farm, but the country of origin. Is it within the EU, meaning it has to meet certain quality standards, or is it from a dodgy farm in China, where the quality will be questionable.
- Carrier Oil – Which carrier oil does the product contain? People may want to know this before making an order.
There are so many legal rules to selling CBD, one of them being that you cannot make any form of medical claim. You can’t say it will help solve anything at all, so be very careful with your wording.
I see this commonly in the industry and flag brands about this regularly. It’s not just to stop them from being sued, but it’s also misleading to visitors.
What Platform Should I Use?
There are a number of different platforms you can use for your dropshipping business, which I will highlight below:
- Shopify – Shopify has some advantages and disadvantages, but the main appeal to Shopify is that you can very quickly and easily create an e-commerce website that is setup to sell products within minimal time. if this is your platform of choice, then you might want to read my guide to building a CBD website on Shopify.
- WordPress – I LOVE WordPress for blogging, it’s what CBD Sloth is built on, however it is a little more frustrating when it comes to e-commerce platforms. It’s a great solution and allows for greater control of changes to some other platforms, while WooCommerce is a great plugin to make the whole process easier. You can also easily find millions of different themes that have been created over the past decade.
- Magento – Honestly, I used to really like Magento 1, it was a great platform, but this is no longer updated, meaning you would have security issues, hence why you would need to build a Magento 2 website. My experience is that Magento 2 websites have way too much bulk, meaning the end result is a ridiculously slow website that won’t score well on GTMetrix. The one positive is that it is very easy to setup from an e-commerce viewpoint.
- Wix – I’m not a fan of the Wix CMS platform, that’s not to say it hasn’t improved drastically over the past few years, trying to shake off its bad reputation. The reality is that it’s a useful platform for small businesses that need to quickly create a basic website, such as a builder or a plumber. But I don’t feel it’s the best solution for a CBD dropshipping website.
To summarise, I’d personally pick either Shopify or WordPress (using WooCommerce).
How To get Started Up
So now you’ve worked out what platform you want to use, it’s time to start working on the website. Below are the steps you need to take in building it out.
Choose Your Supplier
You need to work out who you will be working with and getting a contract in place. Make sure to get those third party lab reports, so you can list them on your website. Sign the Dropshipping Agreement with them and get yourself all legally setup.
Make sure to find out all the details regarding delivery times and costs, as well as which countries they can deliver to.
You need to work out your brand name firstly, so work out some potential names and then check whether the domain name and social platforms are available.
Providing they are and there isn’t a registered business with the same name (or a very closely matching name), you should then survey friends and family to see which name is the best.
You will then want to work on getting a logo designed. I’d recommend going directly to a designer, my early attempts were awful, delegation is key when launching a business and it’s not worth spending your precious time working on a skill you don’t have when your time should be spent elsewhere.
You should also work on your brands story, the message you want to portray and what will be included on the ‘about us’ page. Focus on the reasons you’re launching the business (maybe less on the financial side), your personal history and life motivations.
Setup The Store
Setup your domain and hosting with the CMS platform and get everything in place, including the designs and choosing your theme.
It took me a good week to find the right WordPress theme, so don’t underestimate how long it will take.
Write The Content
This is one of those tasks that people often forget how long it will take, so I’d start as soon as possible.
If you want to rank for the products or brand name, you will need a hefty amount of content on the page. You might also want to start writing relevant blog posts with keyword rich internal links to those product pages.
Try to add your own input, don’t just copy manufacturer product descriptions, unless you want to struggle on the SERP’s.
You should be able to receive these from the supplier, however they won’t always have great images, so you may have to take some yourself.
You may also want some other images for social posts, so it could be worth asking what they have available.
Remember you should compress images and load them in the right size onto the website, so they’re not huge files that will slow down the page.
Create Your Product Pages
You have the images and the content, so now you need to setup all the product details in the back system.
You should also make sure it is possible for customers to leave a review and ensure aggregate rating schema markup is in place, so you can get the stars on search results.
Build In Your KPI’s
It could be a money back guarantee, free delivery on orders over £50 or anything that can help offer trust signals to the customer. If you’re setup with an official board then this can help to add some gravitas.
As you start to build up an email base, you should start sending out weekly or monthly emails, containing discount codes, special offers or interesting information.
These still work wonders at creating a sudden jump in sales, while you can often organise a discount with the supplier directly, especially around key points, such as Black Friday or Easter.
You can build up an email customerbase by offering an incentive, e.g. a competition prize or future discounts.
Well hello, people like myself can help to share the word of your brand launch. You can find a list of the best CBD influencers here, which I try to update regularly.
Whether it’s a post on Instagram, a blog post review or a YouTube video review, you can get your product in front of a very interested audience.
A follow backlink from an industry relevant blog can also help to boost your organic rankings, so these are worth their weight in gold, especially as there aren’t too many relevant domains in the CBD industry.
You should start talking to journalists and offer yourself as a voice for the CBD industry. You can also chat to other journalists regarding articles on entrepreneurs and small businesses.
Journalists commonly require case studies or experts for their articles, providing a few quotes and in return getting a backlink through to your website and hopefully some relevant traffic.
For example, Inews annually has a feature on the best CBD products, while getting a link from here wouldn’t just be useful for SEO, it should also help to boost your sales and an extra trust signal for your website.