Why Create a CBD Oil Dropshipping Business
22 March 2021
An innovative business model has made potential CBD entrepreneurs stand up and take notice. Requiring only a small initial financial outlay, those who once that it impossible are now starting a CBD oil dropshipping business. And you don’t need your own store, inventory, or logistics solutions to get started. You can begin with just a website.
In many parts of Europe and the United States, CBD is now legal. Its use has grown so that it is now part of a variety of diverse industries. You can now buy a CBD latte, get a CBD facial, and buy CBD beauty care products such as lotions and oils. Many selling these products are now using dropshipping as a convenient low-cost way to run their businesses.
Many people are interested in starting a CBD oil business, but not many have considered the potential of a CBD oil dropshipping business. Adding the “dropshipping” could be a key driver of your success. But what is it, and how can you benefit from dropshipping? Read on.
CBD Oil Dropshipping
CBD is cannabidiol, one of the active ingredients of marijuana or cannabis. CBD is a chemical compound found in the plant (Cannabis Sativa). CBD is natural and most commonly used to promote a feeling of calm when added to edible products and oils. CBD is not psychoactive, like delta-9-tetrahydrocannabinol (THC). Academics are continuing to research CBD and its impact as an anti-inflammatory, anti-anxiety, pain-relief option in medicine.
Dropshipping is already used by almost a third of all online retail stores. These businesses do not have a shop-front store, but instead take orders which are then “fulfilled” by a third-party business who is usually the manufacturer/supplier. The third party delivers the products to the customer. The benefits to using this model for aspiring entrepreneurs are that it removes significant risks from your business model, including the cost of production, transport and warehousing.
Your responsibility is simply to make sales. You are the link between the supplier and the purchaser. The supplier effectively sells the product to you at a price lower than the one your customer pays you. The difference between the two prices is your profit. It is a simple, low-cost way to start your CBD oil dropshipping business. All you really need is a laptop and an internet connection. There are many product options: CBD is used in coffee, tinctures, gels and capsules, and many beauty products.
CBD Oil Dropshipping process
Dropshipping follows a simple process:
- A customer visits your online store and buys a product.
- You are notified about the purchase and forward the order to your CBD oil dropshipping partner.
- Your partner packages the order at their storage facility and ships it to the customer.
As you can see from the business model, a CBD oil dropshipping business is simple and easy to set-up and run.
CBD oil businesses are growing. Popularity of the products has increased dramatically and forecast sales in some projections are over $US20 billion in less than three years (Arcview Market Research). And that is just in the United States. Another factor to consider is that extracting the CBD from hemp is much cheaper than taking it from cannabis. You also get more volume from a hemp plant.
You can expect loyalty from your customers once you establish a relationship. CBD oil is a consumable, and you will have many customers re-ordering, particularly those who are using it to treat conditions such as back pain, headache and migraine, ADD, ADHD, insomnia, epilepsy and other chronic conditions. You can even buy CBD pet care products. If you treat your customers the right way, you should be able to build a sustainable, profitable, long-term CBD oil dropshipping business.
It goes without saying that when you limit your overheads you have a significant chance of becoming profitable. By starting a CBD oil dropshipping business, you automatically remove most traditional costs of business. You pay nothing for product development, packaging, store costs such as rent, utilities, office equipment, and you pay nothing in logistics costs – no warehousing and no delivery costs. You also do not need staff.
CBD is a controlled substance, designated by the UN Drug Control Convention. In the European Union and the United States, it is legal to dropship CBD. However, it is not – yet – legal in Australia or Canada.
CBD Oil Dropshipping in United States:
There are two categories of cannabis plants in US law: the hemp plant (less than 0.3% THC) and the marijuana plant (more than 0.3% THC). It is legal to grow hemp in all 50 US states. In addition, hemp has a higher concentration of CBD, so it is a logical choice for most CBD oil dropshipping businesses.
CBD Oil Dropshipping in Canada:
Marijuana is legal in Canada, but it is still considered a controlled substance. Therefore, products containing CBD are regulated by the Cannabis Act. This includes CBD obtained from the hemp plant. You need a processing license to manufacture products, and if you want to produce oil you must be licensed as a seller of cannabis for medicinal use.
The European Union:
In the EU, CBD oil with less than 0.2% THC is legal. It is expected that this law will change in 2021 and that the allowable amount will be reduced to 0.1%. Part of the law also states that the THC must not be easily separable from the product after manufacture. There are further laws against medical claims being made on packaging.
CBD Oil Dropshipping in Australia:
The Australian government legalized cannabis for medicinal use in 2016. However, CBD is available only for those people who have a valid medical prescription, and the use of CBD is strictly controlled.
CBD dropshipping products
There are many CBD products available now: beauty care products, tinctures, gels, capsules, and topical creams. See the list below for more detail:
Topicals include bath additives, body sprays, gels and creams, often used to target a particular area of the body and added directly onto the skin. Bath additives are often used to soothe aches and pains.
Tinctures include the sublingual tinctures from CBD oil. Products are often taken using a dropper and placed under the tongue.
Capsules are usually made from a gelatin or gel that has been infused with CBD. Capsules are a fast and efficient way to get the CBD oil into your system. They are great for busy people who just want to get the health benefit without too much fuss.
Vape concentrates are available for vapers who want CBD health benefits. CBD oil and wax are designed to allow vapers to inhale CBD oil as they would with a traditional vape juice.
Edible CBD products are one of the fastest growing market segments in the CBD marketplace. CBD edible products include candy, gummies, and baked goods. There has been some scrutiny by the FDA in the United States, but CBD edibles remain a popular choice for consumers.
CBD dropshipping suppliers
There are a few options when choosing a CBD oil dropshipping partner, but as a relatively new industry the market, it is not saturated. However, you must choose carefully to ensure that your dropshipping partner is the best fit for you.
One option to consider is to start your CBD oil dropshipping business by partnering with Dropified Supplements on Demand. They have quite a lot of industry experience and offer the option of customizing your labeling to help with your business branding. This is important. Your number one priority is to market your products so that customers choose you and not your competitors. Branding is the way to do that.
Things you need to know
There are some important things you must understand if you want to start a CBD oil dropshipping business.
- You cannot sell CBD in Canada even though many people think they can because it does not intoxicate.
- Buying CBD using PayPal is legal in Britain, but not in the United States. However, PayPal in Britain does consider CBD a narcotic so it could be a problem for some CBD oil businesses using PayPal for payment processing.
- There is anecdotal evidence that PayPal has withheld some funds from British CBD businesses even though they were selling products that were legal. It does not have to be emphasized that having funds frozen is a serious issue for any business. As such, PayPal might not be the best option when choosing a payment processing company.
- CBD products have been banned from sale on eBay and by Amazon.
- There is a credit card processor, Stripe, that will process cards for CBD businesses in the United States.
- A few years ago, Facebook allowed some CBD products to be advertised on its platform.
- Google is also examining whether it will remove its ban of CBD advertising. It is currently running a test program that allows some companies in the hemp industry to advertise, but there are still some restrictions.
There are definite opportunities in the CBD oil dropshipping business marketplace, but you must go in with your eyes open. There are risks in any entrepreneurial activity, but you can mitigate them by considering carefully some of the points raised above. Dropshipping is a great cost-efficient way to get started in the CBD oil business, but you cannot just sit back and think the money will come rolling in. You need to make decisions about partners, legal issues, product lines and, most importantly, how you are going to market your products and what your brand is going to look like. Standing out from the crowd is a big way to make your CBD oil dropshipping business a success. Good luck!