How Online Brands In Regulated Industries Are Building A New Playbook

Forbes

6 hours ago

E-commerce brands in regulated verticals are getting creative with how they reach customers online.
Regulated verticals like firearms, alcohol, pharmaceuticals, and medical diagnostics with an e-commerce component face strict marketing limitations and complex legal frameworks.
A common obstacle is that mainstream ad platforms routinely suspend these types of brand accounts. Yet despite these challenges, many of these brands aren't just surviving, but thriving.
A recent report from RMW Consulting and Shopware, titled 'SpeakEasy Commerce: How to Thrive in Regulated Industries,' highlights how brands in regulated markets are crafting a new playbook for growth and maintaining control to capitalize on big business potential.
The challenge is that highly regulated verticals face more complex hurdles than the average e-commerce offering. 'A product might be restricted in one zip code, but legal in another just a few blocks away,' said Eric Barone of eCheckpoint.
As a result, some regulated sellers avoid social platforms entirely. Others have to build gated experiences for verified users. For example, a firearms distributor may have to verify age, restrict catalog visibility by geography, and collect FFL license credentials before a customer reaches checkout.
However, many e-commerce infrastructures don't tick those boxes for these verticals, and according to the report, as a result, many of these brands live in fear of deplatforming. This leaves brands in what the report dubbed a 'vacuum,' where standard tools like paid social media ads or Shopify plug-ins are either unreliable or unavailable.
There are creative workarounds, though. The SpeakEasy Commerce report highlights a CBD wellness brand that invested heavily in SEO 'in lieu of ads.'
Strategies like influencer-backed educational content and gated loyalty tiers for its customers took precedence over traditional ads. As a result, web traffic grew 65% year-on-year without any media spend.
'When you can't buy ads, you double down on content and word-of-mouth,' stated the report.
This highlights an alternative path for these brands: competitive moats. Some DTC categories might be trend-sensitive, for example, but regulated verticals such as CBD tend to have lower competition and less elastic demand. Today's e-commerce brands can build and market around regulation instead of fighting for a place at the traditional table.
This is only now becoming increasingly digital. Successful operators in these verticals are learning to leverage inelastic demand with flexible approaches to online marketing. Composable platforms with open APIs that integrate specialized tools, geo-fenced content rules, and secure portals are helpful here.
The shift is drawing the attention of both private capital and software vendors. According to the report, private equity is paying attention 'because these 'backroom' categories are increasingly seen as diamonds in the rough.' It's a way for capital to find growth without viral marketing or network effects, but rather niche expertise and adaptability.
Software vendors are noticing, too. Many platforms have deprioritized high-risk merchants. But others, like Shopware, are quietly leaning in, offering options for code ownership. The platform's open-API framework gives high-risk merchants more adaptability in handling platforms with ever-changing rules and regulations.
While e-commerce is often a race to scale, there are other opportunities for growth that don't require identifying trend-driven brands. And even headwinds from tight regulation may not be reason enough to avoid these verticals.
Companies that know how to leverage inelastic demand with practical solutions for dealing with these regulations can create new growth opportunities outside of social media virality.