Shopify announced this morning that brands can now sell hemp-derived CBD on their platform.
This is a tectonic shift for the e-commerce space because it is the first real connection between the exploding CBD industry and the ever-accelerating, Direct-to-consumer vertical in digital. Plus, we’re about to see a an even-greater expansion of CBD products thanks to the reliability and reach of the Shopify platform.
This is a huge win for Shopify, which has been making incredible strides in establishing itself as the infrastructure for brand-conscious e-commerce. In addition to announcing the forthcoming fulfillment network, this openness to allow hemp-derived products on the platform demonstrates how salient Shopfiy is in enabling high-potential verticals to grow on their platform.
But, even with the huge growth potential that Shopify is offering CBD brands as a reliable partner, there are some really interesting complications CBD merchants need to keep in mind as they grow their business.
The wildest wrinkle right off the bat is the simple fact that CBD brands are largely kept out of paid media channels. Facebook still doesn’t allow CBD ads on the platform and Google has a similar policy. While this could change, the time to grow is now. So how can potential Direct-to-consumer CBD brands navigate that policy?
While paid ads aren’t allowed, organic social is very much on the table. So smart brands looking to do acquisition campaigns should look to influencer marketing as a great way to get in front of a lot of different audiences. Companies like Carro and Grin allow brands to discover and leverage several tiers of small-scale influencers that can provide solid ROI while still in the testing phase.
A key to DTC success is not going all-in on a channel or strategy until you have sufficient data to understand your audience. Micro-influencers give CBD brands that breathing room while helping a diverse range of consumers discover their products.
However, that still means traffic numbers are going to be lower and every single visitor is going to be hugely important. So the smartest CBD brands are going to be the ones who get their email program in order. Strong brands will segment email capture campaigns by product, and make a welcome series for each individual product or product category.
The main way to win in the CBD space is education. Consumers need to determine which kinds of CBD products work for them and which doses. So, email capture campaigns should be centered around education. CBD brands then need to use their emails to drive consumers back to educational content that leads to a purchase.
Without over-discounting, CBD brands then need to find a way to take away the risk in trying their products as much as possible. Segmentation will be crucial for this.
And since every single customer counts, customer lifetime value will be another huge factor CBD brands need to manage via email.
The smartest brands will zero-in on ways to boost repeat purchase rates as much as possible. Have review and loyalty campaigns packaged in with your post-purchase email series. That’s always a strong starting point for testing ways to get more repeat purchasers.
Another strong factor CBD brands can take advantage of is how often each individual product needs to be replaced. CBD brands should plan re-engagement email sequences within a week of when each individual product is slated to run out. This is a great way to use automated email to boost repeat purchase rate in a way that consumers will expect.
Ultimately, having hemp-derived CBD sold on the Shopify platform is a huge boon to the industry. It’s going to be a really exciting time to start or grow a DTC business selling CBD on the Shopify platform.
Shopify is offering a 14-day free trial for enterprising CBD brands, as well as a bevvy of resources already available to sellers. It’s going to be really exciting watching the growth of this industry now that CBD brands have access to the big leagues.