What a Year For CBD and eCommerce!
I never would have thought 2019 would be the year I’d become a thought leader for CBD and Cannabis brands around eCommerce and marketing in a restricted industry. I began this journey in the summer of 2018 when my company started acquiring CBD brands that were getting kicked off of Shopify. I learned the pains they were having selling online and came up with a solution to help them.
Education is Key
As I started getting the word out about how to do CBD eCommerce, my message began to resonate with event organizers and I started speaking at numerous shows. My main purpose speaking wasn’t to sell my company’s eCommerce platforms but rather educate CBD brands and entrepreneurs of what they need to consider before selling online.
Most of the hundred plus brands I’ve talked to don’t spend much time thinking which eCommerce platform they’ll use. They are more concerned with the business aspects around sourcing, testing, branding, packaging, and the list goes on and on. When it comes time for them to choose an eCommerce platform, a lot of them choose with what’s familiar to them; Shopify, BigCommerce, and any other Software as a Service or SaaS platform. It makes sense, those brands, most notably Shopify, spend millions on advertising.
While those SaaS platforms make it very easy and turn-key to spin up an online store, the costs when you grow are pretty big. What I mean by that is two things. One, if you choose the Shopify beginner plan for example, you can’t use Shopify Payments for the credit card processing online, you’ll have to use an external merchant. Since you’re considered “high risk” by banks and merchant processors, you’re going to have transaction fees around the 3.5% to 6% range. And then Shopify is going to add an additional 2% on top of that since you’re not using Shopify payments. So now your margins can get hit pretty tough here for just selling your product and that $29/mo plan isn’t just $29 anymore. Here’s a handy calculator from eCommerce-Platforms.com that can help you see it for yourself.
The second drawback around “costs as you grow” is that when you need to upgrade your store infrastructure resources to handle the volume of sales you’re getting, there’s a couple of small steps up on the Shopify plans, but after their $249/mo plan, you’ll have to upgrade to their enterprise plan, which is $2,499/mo. That’s a huge price increase which again, cuts into your margins and bottom line.
Who starts up a CBD brand thinking they are going to just stay small?
Why Open Source eCommerce Platforms
I’m a huge advocate for open source platforms like WordPress and WooCommerce for plenty of reasons. The most important for CBD brands is that you won’t have to pay additional transaction fees for selling your products. Whatever you negotiate with your merchant processor is all you’ll pay. The second most important factor is that you own your data. Let’s say you have a WordPress/WooCommerce CBD store at GoDaddy and you’re not happy with the performance or support you’re getting from them. Since WordPress/WooCommerce is Open Source, you can easily migrate your store to a different host quickly with the same look and feel. When you’re using a SaaS eCommerce platform, that look and feel of the site is their data, not yours. So if you’re not happy for the same reasons, you just can’t pickup your store and take it somewhere else. You’ll have to re-platform and that can get pricey if you want to have the same look and feel recreated on an Open Source platform because you’ll likely have to hire a web developer for it.
Need Help Navigating the CBD landscape?
Contact me and I’d be happy to talk you through it. I promise that I won’t try to sell you anything. I’m just here to help!