CBD Business: Deciding Between Retail and Wholesale

Should you sell your CBD products through wholesale, retail, or possibly both? Both wholesale and retail have their advantages and disadvantages. The term “disadvantage” can have a negative connotation, but in business, it is smart to weigh all options. A disadvantage for one business might be an advantage to another, so you have to consider which way of selling is more in line with the goals of your CBD business.

Retailer

A retailer is essentially someone that sells their products directly to customers to generate a profit. Retailers also typically manufacture their products or seek a wholesaler to provide the products. In this case, if you are thinking about going the retail route, you would be selling your CBD products directly to the customer. This can be done by selling them in a brick-and-mortar or having an eCommerce store.

There are several advantages to being a retailer, such as:

Having a more direct connection with your customers

A direct connection allows you to understand their habits, attitudes, and preferences. Knowing all these aspects of your customers helps you respond quickly to any changes in their buying habits. 

Responding to any customer needs and changes quickly

What products your customers are purchasing most is important to know, commonly referred to as best sellers. You’re able to adjust your sales strategy based on these numbers.

Controlling your CBD business’s brand identity

Since you own the business, you have direct say over what products you want to sell and how to market them. You are also able to control how your business is viewed by your customers. 

Deciding what channels you want to use to reach your target market

You can choose to have a brick-and-mortar store for more customer experience, or you can create an eCommerce store for the convenience of shopping online! 

Being a retailer has its advantages, but it also comes with disadvantages like: 

Not being able to reach as large of a customer base

As a retailer, you have one target market. This means you are potentially leaving behind many opportunities to be found.

Brand awareness may take longer

Depending on how you market your brand, consumers might not find your business reputable or trustworthy right off the bat. Reviews and word of mouth (WOM) can help your retail business gain success. However, it won’t be an overnight success. 

Slow growth

It takes time to increase brand awareness and gain customer loyalty. The CBD industry has many competitors, but that doesn’t mean your business won’t make it. Remember your ‘why’ and what makes your CBD different. Plan a strong marketing strategy, and the customers will find you!

Wholesaler

What is a wholesaler? A wholesaler is someone who sells their products in bulk to other outlets and retailers for sales. They can sell their products to them at a lower cost per item since they sell them in larger quantities. Just like a retailer, a CBD wholesaler might manufacture their products or have someone else do it. At Caprock Farms, we manufacture all of our products to provide our customers with high-quality CBD products. 

Here are several things to think about if you are considering becoming a wholesale distributor:

Generating more brand awareness

Many vendors are selling your CBD products, which increases the chances of being discovered by new customers!

More growth opportunities

Suppose one of your clients sells CBD outside of the U.S, which allows you to expand internationally.

Less marketing expenses

Since you aren’t marketing your products directly to consumers or trying to reach monthly targets, marketing expenses aren’t as extensive. The primary focus is the supply and storing of goods until they’re needed.

While being a CBD wholesaler lets you reach out to more people and offers better growth opportunities, there are still some things to think about:


May not have a direct connection to your customers

The majority of the time, you’ll have to rely on feedback and reports from your vendors to know what their customers are enjoying. This can make it much slower for you to respond to the needs of your customers as you have to go through a long process to understand their wants and needs. Developing a good working relationship with your retailers will help you stay up to date!

Cost of Storing Goods

If you’re renting a storage facility to house all of your products, commercial rates can be pretty expensive. You will need a space big enough to house large quantities of your products. The security of your space is also another factor to keep in mind. CBD inventory is expensive, so you will want a space monitored by cameras and/or alarm systems to keep your products from being burglarized after hours.

What is Better in the CBD Industry?

Selling CBD products as a retailer or wholesaler comes with its own sets of advantages and disadvantages, and each company has to decide what selling platform fits them best. It depends on how you want to structure your business and how you see your business growing in the future.  Whether you want to be a retailer, wholesaler, or even both, if you can manage it properly, choose the option you feel will most benefit your CBD business and help you reach your goals. 

If you’re a retailer, check out the benefits of our wholesale program! Or, if you’re a new CBD business, our blog covers a lot on the CBD industry, evolving challenges, and what to look for in high-quality CBD.

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