Four CBD market pitfalls to overcome
Demographic probe
It's impossible to do business when you lack data on the predominant buyer group, what customers are most looking for and expect, and which brands and forms of CBD they prefer. You should develop your concept to replicate the market needs as much as possible. There is no point in having an endless supply and being on the receiving end for everyone. It is important to target the group of those who have the most power and interest. Do not rely on your own reason or assumptions, reality is often different and in many ways surprising.
Users could be divided into three groups - 21-34 years, 35-49 years and over 50 years. It is thought that young people are mainly interested in CBD and other cannabis ingredients, but statistics show that a third of those interested are in the middle group. The other categories have just over 20%, which is a surprising drop for the former group and a rise in interest among the older years.
The way of obtaining information about CBD also differs. While the middle group, aged 35-49, draws mainly from social networks (many of which prevent or regulate cannabis education), the youngest users and millennials do their own research and invest a lot of time to get all the information they need. They will also appreciate the offer of counselling.
Payments processed
Even as the cannabis market is gradually loosening up (starting in 2018 in the US or anywhere else in the world), the payment gateways are not going to take CBD out of the box of risky substances and throw it in the same bag as gambling, which is considered high-risk. This is not helped by the WHO, which has deemed cannabidiol safe, nor by the huge demand from users. If there is already a payment method that gives the hemp segment the green light and allows CBD trading, it usually charges high fees for its services or waives all liability in the contract.
Unusual competition
The biggest problem with the CBD market is that competition is growing incredibly fast. It is no longer just enthusiasts or users who have started their own business with products they believe in, but multinational companies who see huge potential in cannabidiol. Because of their position, they can lower the resulting price and play on name recognition. This makes them a major threat to smaller operators. This is a new situation and it is impossible to say at this point whether giants such as Sephora, Urban Outfitters or Nestlé will buy out smaller and local retailers. They will have to come up with progressive solutions such as SEO support or marketing tools to make themselves known and not fall into oblivion. However, most methods are paid for and individuals or smaller entities cannot compete with the big companies when it comes to finances.
Digital marketing
Starting in 2021, Google is implementing a Three Strikes strategy, tracking activity and product promotion across all platforms. There's no financial penalty for displaying an ad, but you'll be part of a three-strike system. The first violation is punishable by a three-day site shutdown, the second infraction is punishable by a seven-day suspension, and the third strike lasts as long as three months. Once the time has elapsed and proof is provided that the vendor has pulled the ads (in the form of a confirmation form), the account is back on track and spotless. However, immediate and permanent account suspension can also occur (only in exceptional cases, such as setting up fake accounts or phishing). Of course, the restrictions apply to CBD as well, but through the Help Center it is possible to set up ads to make optimizing campaigns and adhering to policies as easy as possible.
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