Jacquelyn Cooley, market research analyst, 1010data
With a boost from shifting public perception, federal legalization of the hemp plant, and consumer preference for natural plant-based products, online sales of hemp—in all forms—are booming. One product that has been particularly successful is hemp oil, which is purported to relieve pain, reduce anxiety and provide a number of other health benefits.
Whatever therapeutic benefits it may offer, however, hemp oil hasn’t suddenly become a trendy product all by itself. Many health and beauty categories have contained hemp for decades—one only need look as far as Dr. Bronner’s soap products, which have been around since 1940. They all contain the word ‘hemp’ on the label.
But even taking Dr. Bronner’s as a basis for assessing hemp products can lead us to the real issue. Bronner’s didn’t become popular until the hippie movement of the 1970s, 30 years after it appeared on the market. And why? Because the Flower Children had discovered the therapeutic effects of cannabidiol, or CBD, believed to be the true basis of the health benefits associated with hemp oil, although as yet not clinically tested because of its status as a controlled substance.
In the popular eye, hemp became synonymous with marijuana, though the two are actually different species of the cannabis plant. Marijuana’s far higher concentration of THC making it responsible for the state of euphoria. And so Dr. Bronner’s—complete with its now-iconic stream-of-consciousness labeling and stubbornly unglamorous packaging—became a symbol of those times.
Regulations remain murky
Fast forward nearly half a century, and the battle over legalizing cannabis continues, along with much fuzzy thinking about the different types of cannabis and their constitutional elements. Though now nominally legal in all 50 states, hemp oil is still in somewhat of a grey regulatory zone due to its CBD content.
This presents an ecommerce conundrum: Amazon will not sell hemp oil that contains CBD, as it considers the latter a controlled substance. How does this affect hemp oil sales online? Well, that’s a very interesting question, and one that data can inform.
With hemp oil and extract sales growing 224 percent year-over-year through online retail giants such as Amazon and Walmart and vitamin/supplement sellers such as Vitacost and Vitamin Shoppe, a full 89 percent of sales were made by third-party sellers on Amazon this year. As products sold on Amazon do not contain CBD, which is believed to be the provider of the health benefits in hemp oil, are Amazon’s buyers thinking that they’re getting something they actually are not? Could hemp oil purchased online be the newest incarnation of snake oil?
Even though it does not contain CBD, hemp oil sold on Amazon has been extremely successful, but possibly for the wrong reasons. We’ve noticed that buyers of hemp oil often conduct searches using the term ‘CBD’ prior to purchase. In fact, of the top 10 search terms that led to a purchase of hemp oil (without CBD), we found that seven contained the word CBD.
Our data suggests that consumers may either have been under the impression that the products they bought contained CBD, or that hemp oil without CBD can provide equivalent health benefits. We found that many top items in the CBD-less hemp oil category still list explicit health benefits for the hemp oil item that would normally apply to CBD—terms such as “pain relief,” “stress support,” “anti-anxiety,” and “anti-inflammatory”—a conflation that drowns out the fact that CBD is not part of the product.
In an even more flagrant twisting of terms, we found that some sellers on Amazon actually call out the lack of CBD in their products, using descriptors such as “zero CBD” or “sans CBD.” Many people would agree that this is a smart marketing strategy, given the list of top search terms above. Sellers are likely using these keywords to increase search relevancy and drive consumers to their products.
Amazon’s stance
It’s somewhat mystifying that, despite recent legalization of the hemp plant, Amazon still officially considers hemp-based CBD a controlled substance. We speculate that Amazon’s conservative stance toward selling hemp items may be due to pushback from the U.S. Drug Enforcement Administration (DEA) and the lack of universal acceptance that is likely causing. By selling “safe” products through its third-party platform, Amazon effectively absolves itself of any blame concerning ingredient lists and product descriptions.
While today Amazon dominates the non-CBD based hemp oil category, it is unclear if it will change its stance and capitalize on the opportunity to sell CBD-based products in the future. Other retailers such as CVS are already moving in that direction. In recent news, CVS confirmed that CBD products have been sold in at least eight states. Curaleaf Holdings, a cannabis retailer, says CVS will sell Curaleaf hemp oil and transdermal patches in around 800 stores across 10 different states. Likewise, Walgreens has announced it will carry hemp-based CBD topical products.
Undoubtedly, there is path forward for products that contain CBD, both in stores and online. As regulatory hurdles continue to be overcome and as the term ‘CBD’ becomes more commonplace, expect to see CBD-based products in more and more Health & Beauty categories online.
But beyond simply selling the products, the retail market is ripe for an educational offering that clarifies for consumers the differences between hemp oil with CBD and hemp oil without it. Our bet is on those retailers who can meet both criteria, continuing to jump through the regulatory hoops on one hand and transparently helping their customers understand hemp products as they reach the (digital or real) shelves—before they buy them. Those retailers will be the winners in this emerging category.
1010data provides data analytics and business intelligence technology.
Favorite