CBD Business Advice: How to Avoid Overstocking
Most business owners are guilty of overstocking from time to time, and while it’s considered a very common rookie mistake, some just can’t seem to break the habit. Overstocking, as you know, can be an extremely expensive habit, especially when it comes to the CBD market.
If you’re tired of throwing out unpurchased CBD products every few months, this guide is for you. We’ll be breaking down what overstocking is, what causes it and how to make the necessary changes so that you can stop throwing money in the garbage and start enjoying more profits.
What is Overstocking?
Overstocking is the practice of purchasing more stock than you can sell. If you’re overstocking, you might have a bad habit of buying too many CBD products without realizing that it’s unlikely you’ll sell them all before they are no longer good.
Do CBD Products Go Bad?
Here’s the thing: CBD products tend to have shelf lives of 1-2 years, depending on the concentrations of CBD to other ingredients, and depending on the shelf lives of other ingredients in the formulas. That means that you have roughly 1-2 years to sell all of your CBD products before they’re no long within the range during which they can be sold to customers. Now, it’s not illegal to sell expired CBD products, but as you know, it’s a very bad practice.
Are Expired CBD Products Safe to Use?
Expired CBD products are usually safe to use, simply because they don’t contain any materials that decompose, with the exception of certain ingredients used in edible products. Now, that doesn’t mean that they’re still okay to sell. Expired CBD products are likely going to be far less effective than they were when you first purchased them, which means that you’ll likely end up with some angry customers. After all, high-quality CBD products are expensive, and you certainly don’t want to earn a reputation for selling hemp-infused goods that don’t work.
These tips and tricks can be a guide to avoid sitting on products too long and potentially loosing money.
Tip #1: Ask Yourself Why You Overstocked in the First Place
First, it’s important to identify why you felt the need to overstock. Is it because you thought your business would be busier than it has been? Is it because you felt that stores only look good if the shelves are stuffed with products? Is it because you didn’t realize that a certain CBD product has waned in popularity?
Identifying the root cause of your overstocking will help you learn from your mistakes so that in the future, you only purchase what you need.
Try to Find Companies That Don’t Require Massive Minimum Orders
One reason why a business may overstock CBD products is because their distributor has minimum order requirements that are just too high. If your business is just starting out or it’s in a neighborhood with low foot traffic, you might not be able to sell all of the products that you were required to purchase.
As CBD becomes a larger industry, more distributors are popping up, and today, many of them have low minimum order requirements. You can also try speaking with your sales rep to see if you can work out a deal with them in which you buy fewer products during the first few months of business.
Variety is Important, But You Can Go Overboard
If you overstocked because you wanted to offer every type of CBD product under the sun, it might be time to scale back. We understand that it’s an exciting time to be in the CBD industry as every week, more and more hemp products are being put onto the market. Today, in addition to your standard vape oils, tinctures, gummies and topicals, you can find CBD skincare creams, pet goods, gums and more.
Just because the CBD market is more diverse than ever doesn’t mean that you have to offer every type of product that’s out there to your customers. Start determining which products sell the most, and scale back on your inventory accordingly.
Know Your Target Demographic
Maybe certain products aren’t selling because you haven’t zeroed in on your target demographic just yet. Different demographics respond to different types of products, and it’s up to you to keep track of which products are selling more than others.
Follow CBD Trends to Know Which Products Sell Better Than Others
Another issue you may run into is overbuying products that just aren’t selling like they used to. It’s important to follow the current trends in the CBD industry in order to know which products customers are buying and which products they are not. You might be stocking a product that was massively popular three years ago, but it’s just not anymore. If that’s the case, you’ll likely throw out most of that item before it gets a chance to make it into the hands of your customers.
This doesn’t just mean knowing which administration methods are the most popular, either. It’s important to stay on top of which extraction methods are trendy at the moment, which flavors are more popular than others when it comes to edibles and other niche trends that are taking over the CBD industry at the moment.
Be Realistic About Your Revenue
Lastly, you have to be realistic about your revenue. Many new business owners make the same mistake, which is expecting to sell way more than they do in the first few months. Each month, sit down and take a look at your earnings, and use that to determine how much you should be stocking at any given time. It’s good to have a positive outlook when you’re just starting a business, but don’t be so optimistic that it’s unrealistic. You don’t want to fill your shelves in hopes that customers will just magically appear out of thin air.
Keep Your Inventory in Line
Making money off of your CBD business can be quite a challenge, especially if you’re overstocking your shelves with products that can’t possibly sell before they expire. Start to consider your buying habits in order to make better choices next time you have to place an order from your distributor.