The CBD market has absolutely exploded over the past year, with sales expected to hit $591 million in 2018 and skyrocket thereafter. New products are entering the market nearly every day, with a notable focus on beauty, skincare and topicals over the past year. These products can now be found on the shelves of a seemingly endless list of different distribution channels, but one particular channel has been gaining significant traction while flying under the radar: Direct sales.
Growth Drivers for CBD Direct Sales
Direct selling CBD companies effectively harness the power of word-of-mouth marketing – a powerful tool in an industry limited in its formal and social media advertising – by contracting “affiliates” or “brand ambassadors” to distribute or advertise product and earn their own commissions. The CBD phenomenon is fascinating because it has grown up almost exclusively due to word-of-mouth marketing, making this channel an excellent fit for direct selling. In a recent study conducted by Brightfield Group, more than 50% consumers in all U.S. regions learned about CBD through friends or family. By contracting an army of “brand ambassadors” to promote and distribute, this is one of the most effective advertising methods available to this regulated industry.
One example of success of using the MLM Model is Medical Marijuana Inc., one of today’s largest hemp CBD manufacturers, which receives most of its revenues through its MLM arm, Kannaway. Kannaway has also spread to Latin America, where direct sales is a very strong channel and can be expected to show strong potential in the longer term. Other companies, such as Hempworx, Koi CBD and CBD Pure, have experienced vast growth using the MLM model as well.
These companies offer a wide range of products, ranging from the traditional tinctures that first dominated the CBD market, to more beauty products, including collagen and anti-aging creams. This move and the successes of these companies should be noted by mainstream direct selling beauty companies like Mary Kay and Avon, particularly as hemp descheduling and legalization pushes forward.
Though direct selling sales will maintain over time, they will not thrive as well in a legal market that makes CBD products more accessible, convenient, and competitively priced than in years past, especially when advertising limitations lift.
Last updated: Q4 2018