The ongoing COVID-19 pandemic has caused extra stress for consumers, and despite the expense, many did not give up their CBD use! However, with retail outlets closing and new deals online to attract consumers, the CBD industry experienced shifts in purchasing channels.
One purchasing channel that continues to see sales while flying under the radar is direct selling. In 2020, 13% of CBD consumers reported purchasing from direct sellers. This channel is also referred to as “multi-level-marketing,” MLMs, or network marketing.
Direct selling CBD companies effectively harness the power of word-of-mouth marketing. It can be a powerful tool in an industry limited in its formal and social media advertising. Brands contract “affiliates” or “brand ambassadors” to distribute or advertise products and earn their own commissions.
The CBD phenomenon started almost exclusively due to word-of-mouth marketing, making this channel an excellent fit for direct selling. In 2020, 38% of CBD consumers report they first 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 a successful CBD MLM is Medical Marijuana Inc. The company is one of today’s largest hemp CBD manufacturers. It receives most of its revenues through its MLM arm, Kannaway. The company has also spread to Latin America. In this region, direct sales is a very strong channel and shows strong potential in the longer term.
Other companies, such as Hempworx, Koi CBD, and Prime My Body have experienced vast growth using the MLM model as well.
These companies offer a wide range of products. We see traditional tinctures that first dominated the CBD market, as well as beauty products with added functional ingredients like collagen. The successes of these companies should be noted by mainstream direct selling beauty companies - like Mary Kay and Avon. Once the US Food and Drug Administration makes its final ruling on hemp, these larger direct sellers could jump in CBD as a functional ingredient.
However, direct selling may lose steam as CBD products become more accessible, convenient, and competitively priced. The influx of digital marketing campaigns from big CBD brands has changed the dynamic of buying CBD online, making the future of direct selling unclear.
Last Updated: 4/7/2021