CBD has been on everyone's tongue the last few years and the CBD business has been exploding worldwide. If you're considering getting involved in the CBD industry, you first need to understand more about cannabinoids and the products that utilize them. Furthermore, there are many different ways to enter the business. This is why we have created this article “CBD Wholesale vs. CBD Whitelabel vs. CBD Drop Shipping vs. CBD Affiliate
Still relatively new to the mainstream, cannabidiol, more commonly known as CBD, is becoming a household name. The therapeutic and health benefits of CBD, one of many compounds found in cannabis and hemp plants, have created a buzz. CBD oil has entered the marketplace in the form of tinctures, infused edibles, topicals, and more. The growth of CBD oil products has been so immense, in fact, that industry analyst BDS Analytics predicts the U.S. CBD market will reach 24 Billion U.S Dollars in 2024, and Europe is not far behind.
The potential of the CBD industry has prompted many people to explore how they can launch a CBD business. The industry is not without its challenges, though, especially surrounding the evolving legal landscape, but the opportunity is significant. Let's take a look at the various ways of setting up a CBD business.
Estimated reading time: 9 minutes
Table of contents
What is CBD Wholesale?
Wholesale can refer to two possible business models:
- A business may buy branded goods in large quantities directly from manufacturers, warehouse them, and resell them.
- Or wholesale may refer to businesses that produce their own products and sell them directly to retailers, who then sell products to the end user. This can be branded or white label.
Pros and Cons for CBD wholesale
Positives with CBD wholesale could be:
- Lowest price = higher profit.
- Online processes. Nowadays, it is possible to find great wholesale suppliers on the internet.
- Greater variety. You will find a huge variety in the wholesale systems.
- Buy less frequently.
Negatives with CBD wholesale could be:
- Requires higher capital
- Needs bigger space available for stock
- Less interaction with end user
- Possibility of loss
If you choose to distribute a branded CBD product you can utilize the brand's marketing and advertising options. They will typically be keen to share or create anything you need to make their brand seen.
If you want to be a CBD whole seller click here
What is CBD White Label (private label)?
White label CBD products are sold by retailers with their own branding and logo but the products themselves are manufactured by a third party. White labelling occurs when the manufacturer of CBD products uses the branding requested by the purchaser, or marketer, instead of its own. The end product appears as though it has been produced by the purchaser. The advantage is that a single company does not have to go through the entire process of creating and selling a product. One firm can concentrate on producing the product; another on marketing it; and another can focus on selling it, each according to its expertise and preference. The major benefits of white label branding are that it saves companies time, energy, and money in terms of production and marketing costs.
Advantages of White Label CBD products
- Companies can use white label brands to expand their offerings and target customers strategically
- Stores can boost revenue selling white label products at a discount relative to national brands.
- White label brands can be just as good as national brands, as they often use the same producers; high quality creates satisfied customers.
- You can pick and choose your suppliers not having to stick to one.
Disadvantages of White Label CBD products
- Using very similar packaging among brands is called copycatting, which can be illegal in some cases. Private label brands must differentiate themselves sufficiently so as not to mislead consumers.
- A powerful retailer could push out smaller competitors, resulting in a market condition where there is only one buyer.
- The growing dominance of white label brands could make it hard for new firms to enter the market, reducing overall competition.
- As a brand owner you will need to keep the cost for third party labtests in your brand name
- You will need capital to fullfill the MOQ
- Creating all advertising material from scratch
White label (or private label) can be a great opportunity to create your own brand. If you already are a retailer you can easily incorporate your own brand into your shop. If you are planning to open an e-commerce business for your own CBD brand, you will need to take into consideration that you are responsible for finding bank accounts and payment gateway which supports CBD business. We are still regarded as a high-risk business (because CBD comes from Cannabis…..).
What is CBD drop shipping?
CBD Dropshipping is a retail fulfilment method in which a business (you) doesn't keep the products it sells in stock. When a CBD drop-shipping retailer (you) sells a product, you purchase the items directly from a third party (a manufacturer, wholesaler, or another retailer) that ships the product directly to a customer.
So if your business adopts drop shipping, you act as a storefront that customers visit and order products from. Once they place an order, you charge the consumer, and the drop shipper charges you. You never handle the actual products.
This is usually done on an e-commerce platform or your own website. You are responsible for a domain name, bank account, and payment gateway.
White label (private label) drop shipping
In some instances, this can also be done for white label products. Meaning the manufacturer (your supplier) produces the CBD products with your branded label on, keeps the stock, and manages the shipping as well. You usually have to comply with a MOQ for white label CBD drop shipping. The manufacturer then keeps your stock in their warehouse.
This is usually done on an e-commerce platform or your own website. You are responsible for a domain name, bank account, and payment gateway, and lab tests in your own name.
Advantages of dropshipping
- There are no initial investment (unless you choose white label dropshipping)
- Wider selection of products for your customers
- Less maintenance cost
- No stock (unless you choose white label drop shipping)
- No inventory management
Disadvanteges of Drop shipping
- Less profit margins
- Inventory issues
- Shipping complexities
- Lack of control with customer 2nd buy (unless you choose white label drop shipping)
- Issues with suppliers.
From ordering to delivery, you want to make the experience as seamless as possible. That starts with a user-friendly e-commerce experience. You want to invest in building an elegant site that is easy to use (on all devices) and simple to understand.
While dropshipping allows you to sell a wide variety of products, that doesn't mean you should sell everything. Do market research and analyze trends to determine what you should be selling in your store. Think carefully about what is marketable, what is easy to ship, and what is hard for people to find locally.
Even if you thoroughly vet a supplier, you should remain vigilant about the service once you're working together. For example, if there are several incidents of damaged products, lost packages, or late deliveries, cut ties with the supplier or risk losing the confidence of your customers.
Your reputation is everything, so not only do you need to follow through on your promises with reliable drop-shipping partners and a great website, you should also work to boost your online credibility to ensure customer trust. This will guarantee long-term success. From building a robust social media presence to creating successful email marketing campaigns, forming strong relationships with your customers will help ensure the success of your drop-shipping business.
If you want to know more about The Real CBD dropshipping program click here.
What is a CBD affiliate
CBD affiliate marketing is where you promote another company's product or service in return for a commission on the sales you generate. Commissions are typically a percentage of the sale price, but can occasionally be a fixed amount.
The merchant gives each affiliate a unique link so they can track who was responsible for a sale. The link will usually look something like this:
When someone clicks that link, a small file called a cookie gets stored on their device.
An affiliate cookie does two things:
- It helps the merchant attribute the sale back to the right person;
- It (usually) holds an expiration date (cookie time), so you get paid even if the buyer delays their purchase.
You can advertise your personal link through social media, on email campaigns, and add backlinks on other high-performing websites. You could be a blog writer and include your personal link.
The Real CBD cookie time is 90 days. Compared to Amazon who has a cookie time of 24H.
Pros and Cons for being a CBD Affiliate
- No initial investment needed
- Easy to start
- Signing up with several affiliate companies can bring in a substantial income
- Market-ready Audience
- Working from anywhere
- Commision based earnings
- Hard work and a lot of patience
- No control over the competition
- Uncertainty of returning clients
- Working as a third party
Don't let the thought of fraudulent activity and the lesser control over your brand put you off affiliate marketing.
As high street shopping and visiting physical stores declines, online marketing will increase. This means having an affiliate online presence promoting your products using content marketing, can be a key avenue into your marketing funnel.
If you want to know more about The Real CBD Affiliate program click here.
I am a certified expert in Medicinal Cannabis. We are all about giving correct and trustworthy information. We know how important it is to learn about CBD and cannabis, which is why we want to be your go-to source for trustworthy information. We help you improve your health by using our knowledge and experience as a starting point.