“Should I buy inventory or should I dropship for my hair extensions business?”
“Is dropshipping reliable enough for my business?”
“I don’t have a large budget to buy inventory…”
So what is the difference between dropshipping and buying wholesale? And how much do you need for each method?
We will do a calculation in this article so you can get an idea.
What is dropshipping and what is buying inventory?
Dropshipping is a way of fulfilling orders to your customers directly from your supplier so you don’t hold any inventory on hand.
Dropshipping to start a hair business is wonderful because it allows new hair business entrepreneurs to start without inventory costs and overhead expenses.
With dropshipping, someone can start their hair extensions business with a few hundred dollars or even less.
Dropshipping also helps you maintain a great cashflow since you don’t need to spend all your budget on inventory then spend more money on marketing which can quickly drain your start-up funds.
Buying inventory is the exact opposite of dropshipping. You will have a lot of products on hand and a LOT more overhead expenses.
Buying inventory means that you will pay all the money upfront for products that you want to sell.
The cons of buying inventory for a starting hair business is that the cost is VERY high and you don’t know if your products will actually sell out fast enough. It can cost thousands of dollars for the bare minimum inventory for a hair business. This is because people buy hair at different lengths. In order to sell to more customers, you will have to stock up enough options.
Some of our wholesale clients can spend anywhere between $1000 to $8000. Returning clients can even spend more to 10k+ in a matter of a month or two!
From this, you can see just how much money you will need to buy for enough inventory to start your hair business.
The pros of having inventory is that you can offer slightly faster shipping and can control your shipment processing and quality.
How much do I need to start dropshipping hair extensions?
You can start your hair business with only a few hundred dollars if you choose to dropship at the beginning!
Professional wholesale hair suppliers with dropshipping services would usually charge a fee since they are operating on the different client’s behalf to correctly send out orders. This fee is usually “coffee money” and isn’t too big of a problem.
It’s amazing to see some of our clients making sales over $400-$600+ per order with only a bare minimum Monthly membership, even without any branding or website!
But selling hair extensions without a website or store may not work for entrepreneurs who want to take their business to the next level. Most people won’t have the budget to start with a brick and motar store, so starting a hair extensions brand online can be the easier and cheaper option for many new hair business entrepreneurs.
If you want to sell hair extensions on a website, you may need to invest in web hosting, website building, product images, and necessary paid functions to make your website work well. This may cost $100-$700 USD upfront plus a monthly fee.
Don’t forget if you are adding custom branding, this will cost $50-$300USD upfront as you will need a LOGO and some extra designs for your packagings. This
Now you have a website with great product photos, good looking branding, and a secure hair supplier. We also assume that your business is registered legally so there is no more tax paper or LLC registration fees.
Technically at this point, your business is ready to launch!
Total cost: under $1000.
How much do I need to start buying hair extensions inventory?
This depends on how many products you want to offer in your shop.
Dropshipping gives you the ability to offer many types of hair extensions to your customers without buying the hair upfront.
Buying inventory is the opposite. You will decide on a few products that you want to sell and buy all of them upfront.
The cost for hair business inventory is especially high because you have to stock up many different lengths for the same product.
The smallest inventory you can invest for hair business can cost about $500 to $1000+USD. This is under the condition that you already know what your customers want and only stock up on those items. Small inventory works for hairstylists who have clients that repeatedly look for the same hair.
Then you may want to invest in packagings and branding, it will be an extra $50-$300 USD.
If you want to sell on a website, which is highly recommended, you will need to set aside another $100-$700 and a monthly payment for your website.
Now, you have the same good looking website just as if you are dropshipping, branded packaging and tons of hair on hand to sell. Your business is ready to launch!
Total cost: $2000-$10,000 or more.
So, should I choose dropshipping for my hair business or should I buy inventory?
You can make the decision based on your budget.
In order to start your hair business professionally (not just selling hair on the side to a friend), you need more than basic things such as a supplier, fulfillment methods, packaging, and so on.
You also need a budget for marketing and other business expenses such as customer phone line, business emails, return address set up (you can use a PO box), payment processor set up fees, etc.
Starting your hair business with dropshipping or buying inventory is equally easy. What’s hard is to maintain the cash flow to make sure that your business can stay afloat for the first 3 years.
If you have close to $2000-5000 set aside and a stream of client already, you can definitely consider investing in inventory to start your hair extensions business. This is only if you still have an extra budget for marketing. Otherwise, you will have tons of hair on hand but not enough money to market it to interested buyers.
The safer way to start is to only spend a moderate amount from your budget at the beginning to get started. You can consider combining dropshipping and inventory on hand. Dropshipping requires little budget upfront, and having hair on hand enables you to market your products better since you can take videos, photos whenever your customer requests.
Dropshipping definitely makes it easy for anyone to start their business. If you are able to find a great hair supplier, set aside a good budget for marketing, your dropshipping hair business can still take off equally as well as if you invested to have hair on hand.