It was the summer of 2016, and my inner entrepreneur was compelling me to start a business doing something I love. Cannabis has long been a passion of mine, and I knew that I wanted to build a business in a space that I could be proud of. Hailing from Texas, my options were extremely limited, but I knew I had to keep my hands off the flower. Instead, I decided to try selling smoking accessories, and so Dubpipes.com was born.
During my market research, I thought I landed on the perfect idea. There were some well-established online headshops, but the competition showed me that there was plenty of room to carve out my own space in the market by opening an online headshop of my own.
As this was my first startup, I made several rookie mistakes that eventually made me shut the website down, leaving me with thousands of dollars of unused inventory and a wounded ego. Not great, but I walked away with the following three important lessons.
1. Chinese knock-offs are everywhere
When you are trying to fill shelf space, you quickly notice just how many options there are out there. Countless wholesalers are offering the biggest names at rock bottom prices. A lot of these companies are great, but you need to make sure you are doing business with reputable dealers.
A glass product is very easy to knock off. I learned this the hard way when I received my very first shipment. The box contained around 50 pipes, a few unbranded water pipes, and five RooR bongs. It only took a second to tell I had been ripped off—poor quality and the trademark “Rs” facing the wrong way were a dead giveaway.
That’s when I started to do some research and found that this is a huge problem in the industry. Not only are there more fake RooR water pipes manufactured than real ones—in fact, it goes way beyond that. A lot of companies sell glass designs that have been stolen and sent off to China.
If I had done more research beforehand, I would have known that I should stick to buying from the big name distribution companies instead of the cheapest. Working directly with glass blowing companies is definitely more expensive, but it would have allowed me to establish a stronger brand by distributing quality products to my customers.
2. Credit card processing companies hate us
As I was getting started, there were hundreds of glass pipes, multi-chambered bongs, and dab rigs spread out on my living room floor. I could almost smell the money coming in. I had spent weeks building the website and had just finished taking pictures of the glass to upload to the site. It was now time to start looking into how people could give me money for any of this.
My first instinct was to use PayPal since I read that it easily integrates with websites, and has a pretty friendly fee structure. That was until I read that “paraphernalia” was on their list of prohibited items. I thought “no big deal,” surely there was a company that could help me out. So I tried the next credit card processing company, then the next, and the next. No dice. Every single one had the same policy.
I had just sunk thousands of dollars into this project, and I was learning that there would be no way to accept payments. I felt defeated before I even opened my electronic doors. After hours of searching, I learned that what I needed was a high-risk merchant account, with fees that were 2-3 times the industry standards. Finally, I had a way to make money, but the margins I was expecting had all of a sudden been cut drastically.
3. You need a non-traditional marketing plan
If you have any experience building websites, you know that just because you build it, does not mean they will come. You need a way to drive traffic to your website, or no one will ever see your offerings. With a business that revolves around cannabis, this is a huge challenge.
In other markets, you can start buying advertisements on Google or Facebook to start generating sales from day one. Naturally, this is the route I went. My ads were all set up, and I was excited to see the money start rolling in. It wasn’t long after I hit publish on the ads that I got the notification that revealed the uphill battle I was facing. All of my ads were denied. No publishers allow you to promote cannabis products even if you offer them as “tobacco use only.”
I thought I had to lean on search engine optimization (SEO)—the marketing practice I knew best. The problem with SEO, is that it takes a long time to start seeing any results. In fact, my store was open for four months before I sold my first piece of glass! By month six I didn’t see enough sales to justify going any further. So I gave up and decided to pivot from a headshop to a media company, THCoverdose.com.
What I know now
Looking back, there was a world of marketing options open to me. Unfortunately, I was young and simply not aware of any of them. I could have partnered with brands to promote to their audiences or made deals with influencers to pitch my shop. Sponsoring small cannabis blogs would have been another great way to get the name of my headshop out there too. If you dream of starting your own online headshop, don’t make the same mistakes I made. You can achieve success with your online headshop with the proper market research, a firm understanding of how cannabis businesses are treated, and a sound marketing plan.