Hustle and Dream: Entering the second generation of Hairinomics

This post from Ed over at Dream and Hustle is hilarious, as is his entire take on the new economy. Visit his page for some next level afronomics.

Source - Dream and Hustle

How to Keep Ballin Hard Like a Boss with the Hair Extension Hustle

When it comes to doing business in the hair extension industry, the landscape has changed dramatically since this article was first written in 2012. Today, there are more established players in the hair industry and the focus now is to squeeze out the independent smaller operators in the hair extension space. In business, when the landscape change you have to change with the landscape if you want to stay relevant and thrive. In this updated version of the hair extension article we are going to show the sistas how to remain a boss in the current landscape by focusing on the ground game.

The purpose of the original published article was to show sistas how to self-brand and engaged in sista-to-sista business or S2S or the she-conomy. Back then, many sistas like Bria Myles and Ms. Koi, Buffie the Body and Keyshia Ka’oir were into King Magazine butt modeling and doing rap music video shoots participating in the objectification of black women by black media to make a name out of herself. But as you see, the smart sistas like Keyshia Ka’oir () realize her real target market is other sistas who love seeing beautiful sistas and willing to pay for endorsed and branded products by sistas, for sistas. You can find the original article () where we highlighted Keyshia early on and as you see, she made the full transformation into S2S. Buffie the Body switched to exercise videos – we mentioned her back then also and she made the S2S transformation. Meanwhile, what is Bria Myles doing again right now? Yeah, thought so.

You sistas do not want to be a washed up butt model so don’t even go there trying to be a black women marketing yourself as a sexualized object to broke black dudes who ain’t got money to pay for anything..unless you sistas want to end up like Bria Myles. What you sistas want to do instead is focus on is being a self-branded sista and target your real audience – other sistas who admire you for your beauty, your leadership and strength and most of all, your style, grace and class as a sista. That is where the money at and just like the original article showed Japanese models selling branded false eye-lashes to other Japanese women with success, we talked about selling branded hair extensions to sistas and that is what this article is about.

This article and this discussion is not about just “selling hair” – if you are reading this article because you want to learn about “selling hair” then you are not going to make it in this current landscape because the hair itself is moving towards a commodity with so many players involved. This article is more than selling hair – this article is about sistas creating her powerhouse brand to do business in the sista-to-sista global market space. Once you sistas learn to ball like a boss with your own brand then you will understand that selling hair is only one component of your brand and you need to focus deeper into other products and services in the sista-to-sista space. Our goal is to show sistas how to make strategic boss moves and we hope you learn how to be boss in anything you pursue. So let’s get into making things happen with the hair extension or hair weave game.

The Current Landscape

Before, hair extensions were sold through beauty retailers that were mostly foreign-owned and operated. Today, thanks to Alibaba, entrepreneurial sistas can connect directly to brokers and the source for hair extensions and sell directly to sistas, bypassing the local stores. But there are several channels we are seeing now with the hair extension model that bypass the traditional foreign-owned black beauty store in the black community.

Hair Boutiques. These are boutiques that focus on hair and present the hair products in an immersive way and have specialists who can consult and advise. While this is a great model that engages customers, one of the challenges has been dealing with smash-and-grabs destroying stores and causing inventory loss where customers cannot wait for a replacement and risk avoidance must be considered with this approach.

Affiliate Programs. This is the fastest way for sellers to ramp up by just marketing a brand and allowing someone else to drop ship the product direct to customer. The only way affiliate option can work is if the affiliate program is a quality program that has advance white labeling and a good product but this is not reality as many affiliate programs have poor quality and little to lose shipping a poor product since the affiliate will bear the brunt of the criticism and fallout. So the goal here is to make sure an affiliate is credible and top quality and has advance white labeling capabilities.

Independent Sales. In this option, a sista entrepreneur buy wholesale or in bulk from a wholesaler overseas, mostly from China via AliExpress and re-package and re-brand the product as their own. Or in many cases, a sista would go direct to the source and source the hair herself. This option has the most customization and flexibility, independent sales has the most overhead and the most risk and should only be considered for high volume sellers with established markets and customers or a strong enough brand and investment.

Direct-to-Stylist. This model does not have independent brokers or middleman but ship directly to stylists who actually install the hair in a business-to-business format. This is the best and most proper approach to the hair extension industry to allow the stylist who already have an established relationship with their customer be the advocate for the hair extension product. The challenge is to be the premier provider to stylists and the cost of being competitive is going to be high targeting trade shows and direct marketing cost.

So knowing the current landscape, how does a sista approach the hair industry nowadays? The market has already matured and stylists know there are services out there they can order hair from. There are plenty of hair extensions boutique popping up and there are plenty of affiliate programs and independent sellers in a given territory or region. How does a sista come in right now and take over?

Strategic Approach: Leveraging the Landscape

A sista strategic goal in the current hair extension market is to leverage the established business and channels and promote her own brand. In other words, create a branded hair extension product that can be sold in boutiques or recommended by stylists. Or operate as a channel such as a wholesale distributor or fulfillment. Either way, a sista is going to have to establish a brand and build a business model around her brand.

To execute, what a sista should focus on is the following elements and components to her strategic approach:

Area Domination. This involves focusing on a hyperlocal region first and then expand to other hyperlocal regions. Once 2-3 hyperlocal regions have been understood, then go national with the successful and best model of establishing hyperlocal markets. A hyperlocal region is a city block or a part of town like West Side, North Side, South Side and East Side and can be a part of those sides of town. Many business in all industry fail because they fail to do grassroots ground game and try to go big and national first. Then someone small come in and work the SME (small to medium enterprises – stylists, etc.) at the local level and convert business to use their product.

Transaction and Fulfillment. How you accept payment and handle fulfillment should be the first defined strategy before anything else. If you accept credit cards, can shady customer use the product and dispute the payment and you fighting the claim with the credit card companies holding up your payment longer than 45 days? So you may only want to accept cash or certified funds like a money order. Do you invoice net 30 and realize the small business went out of business and overseas and you have no way of knowing? Then there are escrow services that hold products and cash and do not transfer the product or the cash until they get both from both parties. And fulfillment, can you track the order? Do you have the customer pick up or you just send in a package? How you accept payment and deliver the product define your brand more than any marketing gimmick, remember this.

**Avoid Overhead. **The biggest overhead is leasing commercial space as you are paying $2000/month or more for rent and may not have enough customers and purchase volume to afford your lease starting out. Or buying inventory upfront where the products may not move as fast as you expect to convert to cost+profit and you have to end up selling below cost to move the product out of your inventory to convert to cash+loss. What you want to do is consider modern retailing models like pop-up boutiques and pre-payment plans and group buying which reduce overhead, spread risks and reduce risk to having inventory on hand for too long.

So as you see, what you sistas want to do is strategically use lightweight and flexible strategies that allow you to get in and get out quick. No long term commercial leases, no garage full of bundles of hair that are not sold yet and no web site trying to target anybody who doing a search on a search engine for hair extensions. Focus on strong branding, a ground game and getting in and getting out and making a quick solid transaction and an impressionable fulfillment process.

Sourcing the Product

If you are looking to source the product, there are independent distributors out there who are established and some are in China right now (see comment section) who can buy directly from the source and ship worldwide. But you can also consider moving to China yourself and become an entrepreneur that source the product and ship hair extensions worldwide and setup your own AliExpress shop.

When sourcing a hair extensions from suppliers, you have to know the reputation of the person you are sourcing from and their knowledge of the product when discussing it with you. Obviously the best option will be local distributors but it will be more expensive but you have less risk and less turnaround time to receiving the product. Many sistas choose to take a chance and order from China which can take 3 weeks to receive the hair extensions but have the risk of receiving bad products and it take weeks to have a turnaround.

What you want to consider starting out is the profit margins. In order words, focus on quality instead of profit margin and keep your day job. So if the cost of a hair extension locally wholesale is $100 and overseas is $60 and retail for $125, then you should focus on the $100 local version to make sure you build your reputation of quick turnaround and quality products. So with that said, if you starting off or you been doing hair for a while, your focus is more on quality and turnaround and building a marketing base, not having a profit margin.

Here is the thing and we need to be honest, if you want to make quick money, then you need to focus on selling digital services like e-books. You sistas must understand that hair extensions are a tangible product and also a perishable like the fruit market and fish market. You have to physically inspect a product and your customer need to physically see the end product and physically consume the product. And your customer is looking for cheapest cost with the highest quality. Just like a fruit vendor or a fish market, you are going to operate starting out by absorbing the cost in your profit margin and buy quality as a higher cost and sell at a lower margin. That means finding local hair extension distributors first and create volume. Then once you see demand for your product, then move to wholesalers overseas where you can take bigger risks.

So with that said, focus more on local hair extensions wholesalers where the quality can be physically inspected and quickly go to market and sold. Absorb the high cost to build up a reputation of quick turnaround and quality. Then once you establish yourself, look at overseas markets to take on educated risks and higher profit margins. What you can do is buy the hair extension product, re-package it and white label it and sell your product as a premium brand based on premium selection.

Branded Packaging

One of the most critical components of selling hair extensions is the packaging. This is considered “the last mile” in retailing and the most important phase of the transaction process. If the customer is handed something in a cheap plastic bag, then their impression will feel cheap. But if the customer is handed something with a bowtie or a nice box and they have to “unbox” it and have their smart camera filming the unboxing to show on YouTube, then that is a branded and desired experience. So as a sista entrepreneur trying to be a boss, always focus on your packaging to deliver the “last mile” experience.

Let’s talk about the different kind of packages:

Cardboard. This could be craft paper or a design box. The challenge is the cardboard can shed tiny paper specks that can get on the hair. So it is important to have the hair in a plastic package inside of the cardboard to avoid contamination. This option work best where your brand is strong and you selling the hair and just pull it out of the cardboard cover.

Gift Box. This should be done for personal fulfillment where the client is there to pick up the item. Provide the box to the client and open it up in a professional manner to give a nice presentation. Customers will remember the experience. This would suit a pop-up boutique environment.

Plastic Bag. It is important you know the difference between OPP and CPP bags. Most bags are OPP or BOPP bags used for hair extensions. CPP is used for food products mostly and have a smoother texture like the frozen packaging bags or fresh fruits that is also packaged. I bring this up because hair extensions are a perishable product and do not know if the question has been asked if BOPP or CPP are the best bags. Our assumption is CPP would give hair extensions a better shelf life but most hair extensions on Alibaba are BOPP.

Cloth Bag. These are clothes with a tie on top. While the bag is smaller than the other options, there is limited printing options other than a font for the bag. But the good thing is the bag is actually reusable in other ways and unique.

Now let’s talk about the components that goes into the packaging:

Thank You Card. This is a card that thank the customer for their order and explain how you personally select the best products and your warranty. Please note that you should indicate due to health and hygiene, hair extensions cannot be returned or accepted for any reason.

Next Purchase Coupon. This is a card that the customer can use or forward to a friend to order from you.

Card with link to Catalog. This is another Card that gives a link to your catalog for the customer to see what other hair extensions or products you are selling.

Trinket. This could be a cardboard cutout of your brand maybe she can wear on her keychain or a magnet that goes on her refrigerator or a sticker that goes on her guest bathroom mirror or a stylist mirror.

So as you see, your packaging makes all the difference and set you apart from competitors. No matter what you do as an entrepreneurial sista looking to be a boss, focus hard on your packaging to make it stand out from others and that you are delivering an experience that can be talked about and shared among others as word of mouth.

Inventory Management

The best strategy for inventory is to have as little inventory as possible. Your goal is to sell products, not store products. The biggest mistake entrepreneurs make that leads to business failure is buying and holding on too much unsold inventory. In some places, unsold retail inventory is taxable where some car lots and unsold homes have to pay taxes and fees until the product is sold. So remember, the less inventory you have, the better.

In the supply chain, inventory is passing the item from the manufacturing to the consumer and the goal is everybody in the middle make sure they are quickly getting that product out of their hands to the next person who eventually is the customer. So when a wholesaler want you to buy in bulk, that is because they want you to have the inventory and not them and you are holding the product to give to the customer. When you purchase inventory with your money, your money is transferred to the inventory and when inventory sit on the shelf, your money is sitting on the shelf and not used for other purposes like marketing and hiring talent.

Your strategy as a sista making boss moves is to avoid inventory if you can and only have inventory on fast-moving products that sells in days. What you sistas want to focus on is being able to perform a transaction in an escrow fashion, meaning you secure payment, then secure the product and deliver the product to transfer the payment. The customer pays upfront for the hair extension, you quickly order it (local is fastest) and deliver to the customer. Most people would allow the customer to put down a deposit for the item and if the customer do not want it, charge a restocking fee and resell the product as inventory – this option is probably the best option to receive revenue to restock the item as inventory.

A good strategy used in other industry is called group buying and in this model, you list the specific hair and ask customers to provide a deposit and you will charge all of them once you receive the product. This is done online with a lot of e-commerce companies that deal with sourcing from China where a group of people pre-pay for a product which is the minimum order for Alibaba and once you reach that minimum order, you make the purchase and update the customer the order is coming.

Marketing

Sistas should have only one rule when it comes to marketing – all marketing should lead to a transaction. You have a lot of sistas who are out there wanting to promote an image or impression and think this is marketing but this is really brand reinforcement that is only designed as a tax write-off for big marketing budgets. Whatever marketing you do, it has to go to an order form or a catalog or a walk-in to a store. Do not create any marketing material that does not explicitly state a call-to-action such as request a catalog, walk into the boutique or order online.

The approach to marketing is a technique called area domination that was defined by 7-Eleven in Japan. If you watch 7-Eleven business strategy, they never open up just one shop in an area, they open up many shop in a specific area. The science is behind the fact the average customer does not travel more than 6 miles to do 80% of their purchases and when a customer walk by many 7-Eleven, it reinforce the brand and word of mouth and suddenly, all of the 7-Eleven shops are doing well. This is how 7-Eleven aggressively grow their worldwide operation through urban areas with success.

For a sista to be a boss, she should use the same strategy – focus on dominating a hyperlocal area and move on to the next community and the next community after growing each one. After a while, things will just blow up big. Do not try to be big from the beginning all spread out like others are doing and they end up collapsing because they did not have the ability to execute a ground game like you can and snatch up their customers locally.

Here are the elements we like sistas to use to set herself apart from the rest and establish area domination:

Create Micro-Events. These are events that can fit in a small boutique like a retail shop rented out on a Sunday that invite stylists to come in and sip on wine and sign up as a connect for hair styles. Kinda like a shop and sip, right? In this event, the goal is to showcase the hair, tout the turnaround time that you have and the customer support and also to get orders and discounts for orders. Always look at doing giveaways of products that didn’t sell but the tickets to the event paid for the loss on these products. Make sure you unbox your product from your packaging as a demonstration.

Vending Table. This is a table that can be setup anywhere such as a church, an actual salon or a trade show. Get a foldable table and a trade show skirt which can be bought at Amazon. But what is important is having an angled display that display hair at an angle for better viewing versus having hair extensions sample lying flat. Make sure the goal of the vending table is to help educate consumers about your web site, the purchase product and what you offer and your turnaround time and support as your selling points. Showcase your packaging on the table.

Models and Photos. Find a model who can showcase all of your hair and promote your brand. It is better to get someone local to sign a branding/marketing deal with and help make that local person famous like you and yall both are up and coming. This model can be the face on your packaging and also the brand in your social media marketing and show up at the events and trade shows.

Establish Touchpoints. These are tablets, kiosks, big screens and web sites that help your customer learn more about your business and what you offer. The goal of tablets is to show potential customers your line of brand and help gather their information to learn more. You can create the table to operate on an affiliate basis to collect customer information and send branded information. Digital signage and printed signage can have QR codes and call to action such as a phone number. Printed brochures and mini-magazines featuring local models wearing your brand can also spread word of mouth in a local community.

Making the Transaction

Transactions is the core of any operation and the most critical. It cost money to buy a product wholesale to add to inventory and if there are no transactions then there will be no conversion from inventory to revenue. The components of a transaction is the agreed terms, the payment method and the fulfillment. There are agreed terms such as no returns on hair extensions and the payment method is cash or money order or online payment and the fulfilment is how to present the product to the customer.

For terms of the transaction, make sure you write down each item. Do research on how other hair extensions and other beauty product lay out their terms and adopt what is useful for your terms. If you run a web site, a checkbox stating the customer agree to the terms should be required to be checked to complete the checkout. You do not want to try to sell the customer and then state terms later, always be upfront to let the customer know that you do honest business.

For payment method, cash or certified funds that are cleared are your best option. If accepting credit cards, keep in mind that there are more than enough customers who will try to dispute the charges causing your merchant processor to withhold payment from you. Cash should be accepted in a secure environment and make sure you put on the boutique that this store does not carry cash in big letters. The only environment I see cash is collecting cash on demand from a stylist and salons who have cash on hand from their customers. When dealing with a customer, a check or money order made out to you is probably best. Not saying credit cards are a good option but you are putting your revenue at risk using this option. Debit card is another option that is better than credit cards and should be considered also.

When presenting the product to the customer after payment, you can deliver in several ways. If you are independent with no shop, you can meet them at their workplace or a corporate office or a lobby and deliver their product. Or bring it to the church they attend on a Sunday. If you have a store, you can have pickup at store and have the customer come pick up their item and use a phone SMS notification or email their product is at the store waiting. Or you can send the product to the stylist and inform the customer their hair is waiting at their stylist to be installed. One of the most important elements is being able to track the shipment of your hair extensions and timely notification to your customer on the delivery process.

If you have a web site and allow customers to track orders which we recommend, we would like for you to know the status and how to track. The status are “preparing for shipment”, “shipped”, “arrived”, “ready for pickup” and “delivered” and you need to know this with a timestamp in your fulfillment process. If you are using software or building your own system, make sure you can mark a product status which will in turn send out an email or SMS (email is cheaper) to inform the customer of the product status. This is a very important step that other hair extension vendors have not mastered but you can use to leverage your position.

Managing Risk Reduction

Many sistas who get into the hair business run into risks and setbacks that can hurt their business. The top 3 I can think of is damaged product from the wholesaler or while in transit to the end customer, smash and grabs and bad customers who refuse to honestly pay for a product they received.

The best overall solutions to these risks were already provided but let’s go over the main points again:

Buy Local. The best approach is to buy from a local wholesaler where the product can be inspected by you before paying for the goods to sell to your customer as well as deliver a quick turnaround. Let others such as the wholesaler or the distributor absorb the cost of holding bad products that will not sell.

Buy on Demand. Allow a lag time between a customer placing an order and you source the product upon an order initiated. Allow customers to place a deposit to as goodwill and you have a restocking fee of 15% if they refuse to accept the hair extension you purchase. Also allow group buying by having pre-orders and when enough pre-orders are created, buy in bulk.

Certified Funds Only. Accept only cash, debit or certified funds. Credit cards run the risk of withholding payments tying up the revenue for your operation and you want to always have your funds available for marketing and operation expenses.

Pop-Up Boutique and Micro-Events. By establishing temporary locations, there is no permanent store for thugs to scope out and target for a smash and grab.

Become a Self-Branded Boss!

The purpose of this article is to show the sistas the opportunity for sista-to-sista or S2S business models such as the hair extension business. Once you sistas learn to operate lean and nimble businesses, you can easily move beyond hair extensions to other S2S lines such as beauty products and fashion apparel.

The most important takeaway we would like for you sistas to remember is do not allow others who trying to be too big and too expansive intimidate you from going in and getting yours. Stay hyperlocal, perform area domination and build up one good product, one good transaction and one good customer at a time.