Executive Summary
More and more people and pets are turning to CBD as sales in the US rose to nearly $2 Billion dollars in 2022. Many CBD oil, gummies and tinctures are sold online to consumers who enjoy the convenience of home delivery. The brands and marketplaces that sell CBD products, however, often face unique challenges when it comes to offering credit card transactions, online advertising and distribution.
While these challenges can make it difficult to reach new customers, they also motivate marketers to increase their focus on the retention of their repeat customers and find creative ways to increase the lifetime value of their most loyal customers. In this article, we’ll explore the hurdles that CBD merchants face and the opportunities that have become key to invest in to grow a base of loyal customers for CBD products.
Subscriptions Are Different for CBD
CBD products are on the rise – close to $2 billion in sales in 2022. CBD products, like CBD oil, CBD gummies, and CBD tinctures, are used to treat chronic pain, anxiety, inflammation, and to help people sleep. More and more people are turning to CBD as a solution.
Right now, however, it can be difficult to sell CBD products online. Many payment gateways do not support payment processing for CBD brands, and states regularly change what can (or cannot) be sold to their residents. It is also difficult for CBD brands to engage in typical ecommerce practices related to paid ads for acquisition, as most ad platforms do not allow CBD to be advertised on them.
Repeat purchasing is an incredibly important focus for CBD brands because it lessens the impact of high acquisition costs through improved LTV and higher profitability from upsells. One of the most effective ways to ensure repeat purchasing is through subscriptions, but these too can be different for CBD brands.
No one knows subscriptions for CBD brands better than the Autoship Cloud software powered by QPilot. Autoship Cloud provides an opportunity to implement software that comes with all the services CBD brands rely on and need, and offers expertise specific to CBD subscriptions through the service of its team.
This expertise comes down to:
- Experience adjusting pricing and product availability due to changing regulations in specific states or areas.
- Analyzing critical repeat customer behaviors as threats and opportunities to increase lifetime value.
- Optimizing customer offerings and merchandising to increase the appeal of repeat purchasing to new subscribers.
- Automation that makes the subscriber experience superior to any other channel and enables upsell opportunities on repeat orders.
This is why CBD brands that migrate existing subscriptions to Autoship Cloud see an average subscription growth of 521% in their first year! No other software offers the same tools and expertise and that CBD brands need to overcome many of their unique challenges.
The Only Subscription Software for CBD
Autoship Cloud is the most complete subscription software for CBD brands selling online, backed by an expert team and 5-star support. Find out how CBD brands that migrate to Autoship Cloud grow 521% in their first year!
What Are the Hurdles CBD Brands Face in Ecommerce
Regulatory Issues Facing CBD
CBD and other cannabinoid products like hemp are tightly regulated. In addition to a shifting landscape at the federal level, each state allows different products and uses within their state lines.
A premium CBD brand trying to sell products across the country needs to pay attention to changes within each state. They may be able to offer product X one day in Ohio, for example, but not the next if a regulatory change occurred.
This means that CBD companies are regularly updating products and prices across their catalog and customer base. For example, the State of Utah last year amended how CBD products calculate the amount of THC in Delta-8 products. This meant CBD brands selling in Utah could offer a higher concentration of THC and had to update several products at the SKU-level.
The Autoship Cloud plugin makes these updates quick and straightforward, with bulk updates and a responsive support team to ensure these updates happen accurately.
Payment Gateway Issues for CBD
As a fairly new industry with the tight regulation mentioned above, many commonly used payment gateways like Stripe or PayPal restrict processing orders for CBD products. CBD companies are viewed as “high-risk” merchants and can only work with certain gateways.
This restriction often influences which shopping cart CBD brands use for their online sales. WooCommerce has more payment options available for CBD order processing, like Square and NMI, for example, while Shopify restricts CBD sellers to Authorize.net.
Shopify, for example, only allows ecommerce companies selling CBD to use Authorize.net on their platform. WooCommerce has more payment options available for CBD order processing, like Square and NMI, for example.
Advertising Issues for CBD
Online advertising and media have long restricted ads directly promoting CBD products on their platforms. Due to the stringent regulations in most states, these advertising platforms have long viewed CBD as a recreational drug.
Google, however, announced in January of 2023 that it will begin easing some of its restrictions to make it possible for CBD companies to advertise products.
Google Ads policies will be updated to allow for the promotion of FDA-approved pharmaceuticals containing cannabidiol (CBD) and topical, hemp-derived CBD products with THC content of 0.3% or less in California, Colorado, and Puerto Rico.
Google ads update
Due to these restrictions on paid advertising, CBD companies typically turn to SEO, affiliate and influencer marketing, wholesale, and in-person selling for sales.
Subscription Opportunities for CBD Brands
Why are subscriptions a good option for CBD? With the restrictions mentioned above making acquisition more complicated, retention marketing is a critical focus for CBD brands investing in growth. This means getting the most from each and every customer, and subscriptions are a great way to do that.
Subscriptions give brands an opportunity for greater engagement with customers, higher profitability and predictable revenue, and the ability to launch new products.
Greater engagement with customers
Subscriptions provide a unique opportunity for any brand seeking increased engagement with their best customers. Instead of chasing one-time purchasers, subscriptions allow CBD brands increased opportunities to get more from customers.
This can be done through surveys, regular check-ins, upsell opportunities, community building, UGC, and feedback. There are so many ways to benefit from greater engagement. It is really up to the brand to understand how to better leverage subscribers, but there is no denying that you can get more from subscribers than one-time purchasers.
Profitability and predictable revenue
The high cost of acquiring new customers is top-of-mind for any brand selling online, especially CBD companies. Subscriptions can offset higher acquisition costs by making each customer that subscribes more profitable for the company.
Another major benefit of subscriptions is predictable revenue. This gives any business an opportunity to plan more effectively for the future. This can mean acquiring the right inventory, getting more capital to fuel acquisition, or just having consistent revenue to offset operating costs.
Autoship Cloud provides increased revenue opportunities through several key focuses. First, with a flexible subscription experience, customers can manage and personalize their subscription to match their consumption needs. Second, insights into customer behavior can make each subscriber more profitable. For example, knowing what products are best sold together, or which months customers are at risk for churn, gives CBD brands critical information on their customers.
Finally, the Autoship Cloud team consistently provides product updates and feature requests for CBD brands seeking to improve their customer’s subscription experience.
Releasing new products
Having a strong subscriber base gives any brand a ready-made audience to market new products. With customers that are already using your products and trusting how well they work, you can upsell other products into that same group.
This can vastly increase the profitability of your subscription program, increasing predictable revenue and further offsetting the cost to acquire customers.
How QPilot Grows Subscription Programs
There are some unique considerations for a great subscription program. Subscribers should be able to get the products they want on the frequency they want. Subscribers should also be able to easily manage their subscription at any time. Both of these things need to be done in such a way that is easy for the brand to manage as well.
Subscriptions for CBD brands can be a bit more complicated. When a CBD product is no longer available to be sold in Utah, for example, any subscribers with that product will be affected. CBD brands also need access to the specific payment gateways they use for one-time purchases on subscription renewal payments.
What is the Best Subscription Software for CBD?
The best subscription software available for CBD is the Autoship Cloud plugin powered by QPilot. If you’re selling on WooCommerce or Shopify, there isn’t a better software option specifically designed for CBD sellers.
How does Autoship Cloud deliver so much value for CBD brands selling subscriptions?
The Autoship Cloud plugin works so well for CBD subscriptions by:
- Increase LTV by giving customers more control with a self-service portal. Customers that can make changes and personalize their subscriptions stay longer.
- Lower development costs and support time with software that lets you quickly put any product on a subscription, with flexible frequencies and schedules.
- Increase customer retention and engagement with automatic notifications around upcoming orders or processing errors.
- Capture more revenue reliably with supporting payment gateway integrations that are friendly to CBD products.
- Leverage data-driven insights on product level (SKU-level) reporting for orders – past, present, and upcoming
- Lower costs with bulk update features for subscription prices, orders, products, and customers with.
- Custom your customer experience with integrations for Zapier, OMS, and webhooks.
- Never run out of products for your best customers with inventory planning features.
- Lower costs and leverage Autoship’s subscription expertise with full service, 5-star support
The Autoship Cloud plugin comes with all of these features available right out of the box, so CBD brands can immediately see an impact on their subscription program. Over time, the most successful brands using Autoship Cloud customize it to better fit their business needs, with different design and data options.
Growth Results for CBD Brands Moving to Autoship Cloud
Any brand selling CBD that wants a better subscription experience for their customers, while also scaling revenue profitably, should see the success other CBD brands have with Autoship Cloud.
Most of the CBD companies that come to QPilot with subscriptions already in place have been using the WooCommerce Subscriptions and WooCommerce Subscriptions All Products plugins. Many of the restrictions that come with these plugins are unlocked by implementing Autoship Cloud.
For context, the average number of subscriptions that CBD brands bring to Autoship Cloud is 800. These brands see growth of 102% in their first 3 months of using Autoship Cloud.
These same brands see 253% growth after 6 months on average.
These same brands see 521% growth after 1 year on average.
How many subscription orders are you currently managing? What are your growth goals for your subscription programs? Schedule a demo today to see how the Autoship Cloud plugin powered by QPilot can bringer greater growth and profitability to your subscription program.
The Best Subscription Software for CBD
Autoship Cloud is the most complete subscription software for CBD brands selling online, backed by an expert team and 5-star support. Find out how CBD brands that migrate to Autoship Cloud grow 521% in their first year!