What is the level of inventory I should keep

A returning question on our email consult is what is the level of inventory I should keep? Of course you do not want to put all your money in your stock. No problem if you have a high turnover rate (for example what you purchased yesterday is sold today) but it can kill your business and passion, if your money is piled up in beautiful hair extensions, but nobody is buying. You do not want to feel like Scrooge McDuck in a warehouse full of hair, do you?

How to calculate your minimum level of stock

To calculate how much inventory you need, you have to analyze a couple of things. First of all how are the delivery conditions of your supplier? In case they offer next day delivery, you can afford to keep a low inventory. But do they always have all the required textures or inches available? If this is not the case you could decide to find a second supplier or to keep extra inventory for these specific extensions.

If your supplier needs more days or even weeks before they deliver, you need to have some stock in the house in case your clients want to purchase the hair. But how much? For this you need to develop a crystal ball over time, you need to predict future orders! Easier said than done? Not easy but it can be done!

How to predict future orders

There are three things you need to develop to have the right insight to predict the level of inventory needed.

First of all, make sure you stay in contact with your clients, in your shop but also through social media. Activate discussions and analyze how they respond on the postings with new pictures of hair. Organize events and make sure at the end of the event you know what they are looking for and might be interested to buy a next time.
Next to this keep good track of your sales, this will help you to discover the most popular items for your clients, okay it is looking backwards, so not really a crystal ball, but it will tell you which items in origin, texture or lengths are the most popular ones.
Finally use analytical tools like Google Analytics or Facebook to analyze the visits to your website, what items attracts the attention of your visitors, how much time do they spend on checking the different hair you are offering. And why don´t you start to write a blog or some postings about a specific type of extensions and see how the people will respond. Do they like it and comment a lot, it does not mean they will actually buy it, but it gives you insight in what item is more popular or could become more popular.

Keep your focus

And do you really need to sell everything that is available on the hair extensions market? If you focus on some specific extensions you can become the expert and distinguish yourself from the others even from big shops that do sell everything. This will also reduce the items you need to keep in stock. See also our post on the right number of extensions to keep at hand.