If you plan to start a business in the CBD industry, now is a perfect time. The market will likely grow into a massive $23-billion industry by 2025, so don’t miss out!
However, you will likely face this decision sooner or later – should you choose private label CBD or drop shipping?
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Private Label CBD vs. Drop Shipping
What is dropshipping?
For many new businesses, dropshipping is a reliable option. It lets you focus on the marketing aspects of your business while a partner handles manufacturing, order fulfillment, or the transportation of your goods.
How does this work? You rely on commercial software to automatically process sales and fulfill orders. Furthermore, you will partner with established suppliers, who will produce, store, and ship the products to your customers.
The supplier will give you a list of products that you can sell. A customer buys these products from you at a higher cost than you pay the supplier. A $20 item on your site might only cost $10 from the manufacturer, netting you $10. All you must do is send the order to your supplier, and they will send out the products straight from their warehouse.
There are some downsides to consider. Most importantly, the supplier’s products will not contain your company’s logo or label.
Private Label CBD
Under this approach, the products come from a manufacturer and have your brand’s label. You will need to purchase products, find a place to store them, and fulfill orders yourself. Fulfillment includes packaging, shipping, and processing returns.
Private labeling happens in many industries, from food and snacks to paint and hardware. A manufacturer provides a unique product with your branding so that you can sell it in-store or online.
With a private label CBD brand, you often have three choices:
- Manufacture the CBD products yourself
- Acquire generic CBD products and use your own label
- Work with a manufacturer to make custom products for your private label CBD brand
When Does it Make Sense to Use Drop Shipping for CBD?
All businesses have unique needs, so there are a few items to consider if you want to dropship. Let’s break down the pros and cons of this method.
- You don’t need to deal with the quality control aspects of CBD (i.e., lab testing), as the manufacturer takes care of everything
- You save considerable time and money required to produce, store, and transport your CBD products
- You can focus your efforts on growing your company instead of fulfilling countless orders
- You may see smaller profits since your prices depend on the manufacturer’s costs
- You can’t place your label on the CBD products, limiting your branding and your company’s growth potential
When Is It Best to Use Private Label CBD?
For most businesses, using private labeling is an excellent option. Customers see that they are getting a unique item instead of generic CBD products, which only improves their confidence in your brand.
Here are some items to consider.
- You can place your company label on your CBD products, significantly expanding your ability to brand and grow as a company
- You set your own prices and cut out any middlemen
- You can create your own products and specify ingredients
- You have to invest considerable time and money into producing, shipping, and fulfilling CBD orders, including finding appropriate storage facilities
- Processing orders can take up much of your time, so you may need to hire help
- It can be challenging to sell CBD on Amazon, so make sure you research this before getting started.
Get Started with Your Private Label CBD Business Immediately
If you are starting a private label CBD business, feel free to reach out to CBD Nationwide. As a leader in CBD contract and bulk manufacturing services, we would be happy to work with you on the supply side of things.
Katie DeVoe is an in-demand educator, speaker, and thought leader in the hemp space. Over the last 12 years, she has started multiple, successful CBD businesses and been a guest speaker at numerous hemp and CBD conferences.