When launching a CBD business, one of the biggest decisions you’ll make is choosing between selling online, opening a bricks-and-mortar shop, or combining both strategies. Each approach has its advantages and challenges, and the right choice depends on your target market, budget, and long-term business goals. In this step, we’ll explore the key differences between selling online and through a physical store, helping you evaluate which option aligns best with your CBD business strategy.
1. Benefits of Selling CBD Online
Selling online offers several advantages, particularly for new businesses looking to reach a broad audience while keeping initial costs low. Here are the key benefits:
1.1. Wider Reach and Access to a Larger Market
Global Audience: An online store allows you to reach customers far beyond your local area, tapping into national and international markets, depending on regulations.
Targeted Marketing: Online tools like social media ads, SEO, and email marketing make it easier to target specific customer demographics based on their interests, location, and behaviours.
1.2. Lower Startup Costs
Reduced Overhead: Running an online CBD business requires fewer upfront costs than a physical store. You don’t need to pay for rent, utilities, or in-store staff, allowing you to allocate your budget to product development, marketing, and website design.
Scalability: It’s easier to scale an online business as it grows, adding new products or reaching new markets without the physical limitations of a store.
1.3. Flexibility in Operations
24/7 Availability: Your online store is open around the clock, allowing customers to shop anytime, which can lead to increased sales, especially in the global CBD market.
Inventory Management: Many online retailers use dropshipping, fulfilment services, or just-in-time inventory systems, reducing the need for large warehousing and upfront stock investments.
1.4. Detailed Data and Analytics
Customer Insights: Online sales platforms offer detailed analytics, providing valuable insights into customer behaviour, popular products, and website traffic. This data can help you refine your marketing strategy and improve your product offerings.
A/B Testing: Online stores allow you to test different product descriptions, images, and pricing strategies to see what resonates best with your audience.
1.5. Easier to Launch
Quick Setup: Setting up an online CBD store can be done relatively quickly compared to opening a physical shop. E-commerce platforms like Shopify, WooCommerce, or BigCommerce make it simple to create a professional-looking website and integrate payment processing and shipping options.
3. Benefits of a Bricks & Mortar CBD Shop
Opening a physical store offers a different set of benefits, particularly if you want to build a local presence or offer an in-person shopping experience:
3.1. Personal Interaction and Trust
Customer Relationships: A physical shop allows you to build face-to-face relationships with customers, fostering trust and loyalty. Customers may feel more confident purchasing CBD products when they can ask questions and receive personalised advice from knowledgeable staff.
Brand Experience: In a physical store, you can create a branded shopping experience, from product displays to in-store events. This can help establish your business as a premium, trustworthy brand in the local market.
3.2. Local Market Presence
Community Engagement: A physical presence allows you to engage directly with your local community. Hosting events, providing free samples, or participating in local initiatives can help build brand awareness and drive foot traffic to your shop.
Fewer Competitors: Depending on your location, there may be fewer CBD stores in your area compared to the saturated online market. This gives you an opportunity to dominate your local market, especially if you’re one of the first to open in your town or city.
3.3. Immediate Purchase and Delivery
Instant Gratification: Customers can walk in, purchase their products, and take them home immediately. This is particularly appealing to those who prefer not to wait for shipping or who want the product immediately for a specific need (e.g., pain relief or anxiety).
3.4. Tangible Product Experience
Product Trials: In a physical store, customers can touch, smell, and even try products (depending on the item), which can be a significant advantage in encouraging impulse purchases.
Education and Demonstrations: You can offer in-store product demonstrations or consultations to educate customers on the benefits and proper use of CBD products.
2. Challenges of Selling CBD Online
While selling CBD online has many advantages, there are also challenges unique to the industry:
2.1. Advertising Restrictions
Limited Paid Advertising: CBD businesses often face restrictions on Google, Facebook, and Instagram ads, which can make it harder to promote products via traditional online advertising methods.
Organic Marketing: To compensate, online CBD businesses often rely on SEO, content marketing, influencer partnerships, and affiliate programs to build brand awareness.
2.2. Shipping and Payment Processing
Payment Gateways: Some payment processors and banks are hesitant to work with CBD businesses due to the industry’s regulatory complexities. You may need to find a specialised payment gateway for CBD products.
Shipping Restrictions: Certain regions or countries may have restrictions on CBD products, making it important to stay updated on shipping regulations and ensure that you can legally send products to your customers.
2.3. Increased Competition
Saturated Market: The online CBD market is highly competitive, with many brands offering similar products. Differentiating your brand through unique selling points, premium customer service, and branding is essential to standing out.
4. Challenges of Running a Bricks & Mortar CBD Shop
While a physical shop offers several benefits, it also comes with its own set of challenges:
4.1. Higher Overhead Costs
Rent and Utilities: Renting or purchasing a retail space can be expensive, especially in high-traffic areas. You’ll also need to budget for utilities, staff salaries, insurance, and other operational expenses.
Initial Setup Costs: Designing and outfitting your shop with fixtures, displays, signage, and decor can add up quickly.
4.2. Limited Operating Hours and Reach
Restricted Reach: A physical shop limits your customer base to your local area, whereas an online store allows you to reach national or even international markets.
Fixed Hours: Unlike an online store, a physical shop has fixed opening hours, which can limit when customers can make purchases.
4.3. Location Dependence
Foot Traffic: The success of your shop will be heavily dependent on foot traffic and the local market demand for CBD products. A poor location or lack of foot traffic can significantly impact sales.
Seasonality: A bricks-and-mortar shop may also be affected by seasonality, with fewer customers during certain months or times of the year.
5. Combining Both Strategies – The Hybrid Approach
Many CBD businesses adopt a hybrid model, operating both an online store and a physical location. This approach allows you to capture the benefits of both selling channels while mitigating the drawbacks.
5.1. Benefits of a Hybrid Approach:
Increased Reach: By selling both online and in-store, you can serve local customers while also reaching those outside your geographic area.
Brand Synergy: Customers who discover your brand online can visit your physical store for in-person advice or product trials, while local customers can reorder online.
Diversified Revenue Streams: Offering multiple purchasing options can help stabilise revenue by serving different customer preferences, such as convenience or in-person interaction.
5.2. Considerations for Managing Both Channels:
Consistent Branding: Ensure that your online and offline branding, customer service, and messaging are consistent across both channels to provide a seamless customer experience.
Inventory Management: Use integrated systems to manage your inventory across both platforms, ensuring you avoid stock shortages or overstocking.
6. Choosing the Right Approach for Your CBD Business
The right approach—whether selling online, opening a physical store, or using a hybrid model—depends on several factors:
Budget: Consider your initial startup costs and ongoing expenses. Online stores generally have lower overheads, while physical stores require higher investment in rent, staff, and utilities.
Target Market: Who are your customers, and how do they prefer to shop? Do they value the convenience of online shopping, or do they prefer in-person interactions?
Competition: Assess the competition in your local market and online. Are there already many CBD stores in your area, or is there an opportunity to be one of the first? Online, you’ll face a more saturated market, so think about how to stand out.
