The CBD Dropshipping Model Explained
CBD dropshipping is a business model where you sell products online without managing the inventory yourself. Instead, a third-party supplier stores the inventory. When a customer places an order on your website, the supplier packs and ships the order directly to the customer for you.
Here’s a specific example for the CBD industry. Let’s pretend I’m running an online store dropshipping CBD lotions. Since I’m dropshipping these products, I don’t purchase them upfront or store them in a warehouse. My dropshipping supplier manages a warehouse with all of the CBD lotions. When a customer places an order on my online store, I send the order to my supplier with all of the relevant information (product details, shipping address, etc) and pay them the dropship cost of the order. Then, the supplier sends the order directly to my customer.
It’s that simple! If you’re interested in learning more about CBD, check out our all inclusive guide to CBD dropshipping.
Why You Should Dropship CBD
Dropshipping is an excellent business model for launching an online store selling CBD. It’s easy to create a website and there’s little to no upfront costs to get started. This makes it a viable option for new and experienced entrepreneurs alike.
Since you don’t purchase any products in bulk, dropshipping is relatively low-risk as well. There’s no need to invest thousands of dollars before making a sale - like you might see with other business models.
Aside from how easy it is to get started, dropshipping offers a great opportunity to build a profitable business. The CBD industry specifically is growing exponentially right now, so there’s a chance to claim a piece of an exploding market.
If you’re interested in selling CBD online, consider starting a dropshipping store! Now let's review some tips anyone new to selling CBD should take note of.
Dropshipping Tips for New CBD Sellers
Become a Marketing Master
Since many parts of your business are automated with dropshipping, you can spend more time working on marketing your products. Designing your website and branding is fun, but marketing is where the money is made. In the beginning, a lot of your time will be spent learning how to run profitable ads, increase site traffic, and turning visitors into customers.
Two ways to drive sales to your store is through advertising and search engine optimization. The average conversion rate for ecommerce stores is 2%, so you likely won’t start getting sales until you have 100 or more visitors coming to your site. The more visitors you bring to the site, the more chances you get to convert them into customers. Ads are great for driving sales quickly, but SEO is great for long term growth as you build up your audience through blog content.
Prioritize Product Pricing
Product pricing will make or break your business when it comes to dropshipping CBD. Because you aren’t purchasing inventory in bulk upfront, you’ll pay more than bulk pricing for orders. This doesn’t mean you can’t build a profitable business, but you’ll need to pay close attention to your pricing strategy.
Use Smoke Drop to keep products costs low for your CBD dropshipping business. The dropship cost in Smoke Drop is typically close to the wholesale price, so you’ll be able to market your products while still making a profit. The main goal of your dropshipping business is to be profitable, so anything you can do to keep costs down will help.
One mistake many new sellers make is trying to compete with Amazon and other competitors on price. You won’t always be able to offer the lowest price, so instead of undercutting prices, try finding other ways to add value to your customers outside of the lowest price.
Automate Your Operations
The dropship business model is built to scale, but only if you automate the right processes. At a minimum, you should automate order processing and inventory management with your supplier. This will save you a lot of time as you begin increasing your order volume. Consider automating other aspects of your business such as, social media posts, emails, and retargeting.
While it’s easy to start a CBD dropshipping business, it is by no means easy to grow it into a profitable business. Like any other business venture, you’ll face obstacles and roadblocks as you grow your business.
A common obstacle for entrepreneurs dropshipping CBD is the opportunity to pivot. Maybe a new product trend has taken shape in the market or you’re not seeing the sales you expected after running your business for a few months. Either way, don’t be afraid to pivot. A big part of running a successful business is learning to accept feedback and improving your business based on that feedback - whether it's from the market or from customers directly.
Pivoting is a natural part of growing your dropship business. It’s not necessarily good or bad, but is essential to finding long term success. Remember that some of the biggest retailers in the world have pivoted at some point - including Amazon!
Offer Excellent Customer Service
There are a number of ways to establish your brand in the CBD market, and one of the most effective ways to do so is by providing world-class customer service. This isn’t just answering customer emails and offering refunds. To really leave a lasting impression, your customer service needs to go a step further.
Think of ways you can further personalize your customer service experience for potential buyers and loyal customers. A few ideas to consider are sending thank you notes to customers who order multiple times, hosting monthly giveaways, or offering personalized recommendations to new shoppers.
Customers won’t always remember what they purchased from you, but they will always remember how they were treated while shopping with you.
Spend Time Working on Your Store Every Day
Earlier in the article we mentioned automating your business, but don’t mistake this for taking a hands off approach. Plan to work on your CBD dropshipping business daily. This doesn’t have to be an eight hour shift, but spending at least an hour a day will go a long way towards profitability.
Daily tasks you’ll likely need to manage are customer service requests, processing orders (if you aren’t automating it), and optimizing any paid advertising campaigns you’re running.
Place Sample Orders
For anyone selling a smaller catalog of products, consider ordering samples from your dropship supplier. Not only can you verify the product quality and shipping speed of your supplier, but you can also take your own product photos and even offer the sample as a giveaway to customers.
By experiencing the entire order process yourself, you can set better expectations with customers, write better product descriptions, and identify ways to improve the overall shopping experience. Putting yourself in the shoes of your customers will help you provide an authentic experience and reveal even more opportunities for improvement.
Keep a close eye on other CBD brands you’re competing with. Keep tabs on their social media posts, paid advertisements, and even email marketing. This will give you a picture of what products they’re promoting and what’s selling well for them. Take the learnings you gain from competitors and use them to improve your own brand and website.