How E-Commerce is Driving CBD Demand: Key Logistics Improvements to Note
E-commerce has grown significantly in recent years, and with it, so did many industries, including recreational cannabis or CBD. The global CBD market is even expected to hit $6.91 billion by 2026.
This makes it one of the fastest-growing industries in e-commerce. For businesses, this growth represents a huge opportunity. And those who do not capitalize on it may miss out on substantial profits.
Let’s examine the factors driving this boom and explore logistics strategies businesses can adopt to thrive in this growing market.
The Impact of E-Commerce on Increasing CBD Demand
The cannabis industry is seeing significant growth due to various factors. For one, an increasing number of individuals are seeking natural solutions like cannabis to address issues like pain. At the same time, easing rules regarding CBD use has facilitated the acceptance of plant-derived wellness products.
E-commerce has been crucial in this expansion by both meeting existing demand and driving it even further. Here’s how:
Increasing Access to Cannabis Products
What once required a trip to a specialty shop can now be bought with just a few clicks. Online platforms are filled with CBD products—ranging from soothing topicals to pre-rolls and more—readily accessible with little more than age verification and a credit card. What’s more, these platforms are available around the clock, allowing customers to shop at their convenience.
Enhancing the Visibility of Cannabis Businesses
E-commerce has pushed CBD businesses—ranging from small dispensaries to large-scale operations—to the front, helping them reach more customers.
Facilitating Product Discovery
While those who prioritize SEO can see more traffic, e-commerce platforms naturally boost brand visibility through personalized product recommendations. This not only makes it easier for customers to discover new CBD products they may be interested in, further driving demand.
Enhancing Convenience & Discreet Purchasing
Unlike physical stores, e-commerce platforms offer shoppers the privacy and discretion they often desire when purchasing CBD, whether as oils, edibles, or flowers. It allows them to browse and buy products without anyone ever knowing.
Streamlining Restocking for Customers
Fast shipping and subscription models have also made it easier for customers to restock their favorite products. This ease of reordering ensures consistent demand and encourages repeat purchases.
Logistics Improvements to Meet Rising CBD Demand
To meet demand, CBD businesses must prioritize optimizing their supply chain across the board, from cultivation to sales. Let’s explore strategies CBD businesses can take to ride this ecommerce wave and ensure success:
Optimizing Cultivation
The growing demand for CBD means an increase in production, and businesses must find the right balance between scaling cultivation and preserving product quality. Optimizing this process involves refining various stages, from sourcing raw materials to post-processing CBD from hemp. To do this, businesses can:
- Establish relationships with reputable hemp farmers
- Automate production lines
- Use systems for real-time monitoring, ensuring optimal growing conditions
Managing Inventory
Proper inventory management is essential for ensuring businesses have enough stock to meet customer demand without compromising product quality or risking overproduction.
One key strategy is the First In, First Out (FIFO) method, which helps ensure older stock is sold first, which helps reduce waste. Additionally, using inventory management systems can help monitor stock levels, shelf-life, and product movements in real-time.
Streamlining Warehousing & Shipping Fulfillment
Efficient order fulfillment is a must for CBD businesses to be able to meet customer demand. By optimizing the picking and packing processes, companies can speed up turnaround times. Some strategies include:
- Storing products in temperature controlled environments to maintain quality before shipment
- Maintain proper warehouse organization to speed up order picking and packing
- Label products clearly with expiration dates and batch numbers for easy tracking
Leveraging technology can further enhance the efficiency of CBD operations, enabling businesses to better manage inventory and forecast future demand.
Enhancing Shipping Logistics
Shipping delays can result in unhappy customers. 23% of consumers say they will not purchase from a company again following a delayed delivery. Bearing this in mind, CBD companies need to enhance their shipping procedures, collaborating closely with reliable partners—especially shipping carriers—to improve delivery routes.
Complying with Industry Regulations
The CBD industry operates under a strict set of regulations. For instance, companies that market CBD and other plant-derived wellness items need to comply with specific labeling regulations, including offering clear disclaimers. Failing to comply with these regulations could lead to penalties and product withdrawals. Remaining current and complying with these regulations is crucial to avoid disruptions in operations.
Conclusion
As e-commerce continues to thrive with no indication of a slowdown and efforts underway to legalize CBD, the market is anticipated to expand further. To remain competitive, companies need to prioritize improving operations, especially by refining their logistics systems. In doing so, companies can meet the demand for CBD and position themselves for sustained success.
