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Cannabidiol, or CBD Oil, is quickly gaining popularity as a medicine for all sorts of ailments, from joint pain to anxiety. There is a lot of money to be made in this sector for both retailers and wholesalers. While many retailers are an option to buy wholesale from various popular brands, there is another, perhaps more profitable way for retailers to take advantage of this growing business sector.

Private Labeling is Trending

Private labeling is gaining popularity in several different sectors. Private labeling is the name for the practice in which a product is manufactured by one company but branded and sold by a different company. Less commonly referred to as OEM, or original equipment manufacturer, products, private label products can generate profit and enhance the levels of trust and credibility for the brand among shoppers.

But is Private Labeling Profitable?

There are some downsides to private labeling but with planning, these problems can be handled in a way that won’t eat into your profit. Here are a few traps to look out for when you decide to start selling private label CBD and some tips for dealing with them:

  1. Order Quotas- Many manufacturers require that you order at least a certain quantity before they will agree to manufacture your private label product.

    SolutionWork with the manufacturer to come up with a creative ordering solution. Ask if they’ll offer extended dating or allow you to meet their minimum through the purchase of different blends or sizes of the item.
  2. Inventory Overload- If you make a product choice that doesn’t match your target market or order more inventory of your private label product than the market can buy, you’ll end up with dead inventory. Private label products cannot be returned to the vendor.

    SolutionAnalyze your market and its needs before committing to any private label order. Make sure that there is plenty of demand. If you already have dead inventory, try to promote it through sales or other promotions.
  3. Customer Perception- There is a common misconception that private label products aren’t as good as their branded counterparts. This is seen in grocery stores all over the country, where people gravitate towards name brands even though the cheaper, private label store brands are nearly the same product.

    SolutionMake sure that the branding on your private label product looks exclusive and high end. Find out what your target market expects from the product you are offering and make sure that you meet their expectations.

Despite these downfalls, the trend towards private labeling is a boom for brands looking to break into the CBD market. There are a number of advantages that go along with private labeling. Here are a few examples:

  1. Customer Loyalty- When a customer tries your private-label product for the first time, they will inevitably decide if they love it or hate it. Should they decide to love it, you win a customer for life. Your private label product won’t be available in other stores, so they will have to keep coming back to you to get more.
  2. Competition Buster- If you and a competing retailer both sell the same CBD product from the same supplier and your competition decides to offer a sale price on that product, you would end up losing business. If you have a private label CBD product, however, this competition is thwarted. Since the product is not labeled the same, you do not have to sell it at the same price as your competition, thereby easing the pressure of competition.
  3. Margin Booster- Private label products have a greater profit margin. This means that you can offer your sales associates incentives for selling your private label product without eating into your bottom line.

Got tips and ideas regarding CBD? Email hello@castlerockco.com today!