Companies like Dressbarn, Linen ‘n Things, Modell’s, and Pier 1 recently filed for bankruptcy protection and liquidation. All three of them have been bought by Retail Ecommerce Ventures, a company owned by Tai Lopez and Alex Mehr. Tai Lopez, who heads REV, has an expansive vision for the company.
If you haven’t recognized his name from his YouTube videos, Lopez is a self-help guru who is also a business consultant and advisor to several multi-million dollar businesses. His partner, Alex Mehr is an ex-NASA scientist who co-founded and sold the online dating app called Zoosk. Together, Lopez and Mehr are buying some high-profile businesses that are victims of the economic crunch during the COVID-19 pandemic.
Most business people do not see this as a wise move. They feel that these brands are dead, and there is no point in purchasing their businesses. But Lopez disagrees with them. He says that each of these businesses is more than ten years old, and they made more than $10 million in a month, which means they have the potential as well as the market reach expected from businesses of their stature. They failed during the pandemic because they could not compete with the big online brands like Amazon and Walmart.
According to Tai Lopez, the shift of retail to eCommerce started long before the pandemic. But the COVID-19 crisis made changes in the retail business that normally would have happened in a decade. Lopez feels that each of the companies bought by REV has the same revenue potential that they did before. These brands just need the right online platform to perform.
Conversations with Tai Lopez are but always retail-centric. He often combines neuroscience, movies, books, and even chess in his ideas of retail. Therefore it is not surprising that his motives behind buying out these companies are inspired by one of his favorite books, “Crossing the Chasm” by Geoffrey Moore.
According to the book, the first objective of any corporate company should be to secure a steady channel of distribution in the target market. It must be a channel that the target customers already consider a practical option for their purchases. For any company, this objective must precede every other business goal, such as revenues, profits, PR, or even customer satisfaction and retention.
It is clear that Tai Lopez intends to utilize the well-established distribution channels of companies like Pier 1, Modell’s, Dressbarn, and Linen ‘n Things, and give them a digital overhaul. Although several other companies have tried using the same business model, none of them have done it with a vision as clear as Tai Lopez. REV has paid substantial amounts for each of these businesses. It paid $3.64 million for Modell’s, while Pier 1 cost the company $31 million at the bankruptcy auction.
REV states that they intend to scale up ethical companies on the digital front because, for Lopez, the most important factor of evaluating companies before a purchase is “trust.” Although most business people perceive trust and goodwill to be intangible elements, Lopez considers both to be essential for the sense of a company.
Before purchasing Modell’s, he evaluated the company’s presence amongst the people of New York. He was especially intrigued by the stories that expressed the brand’s relationship with the people of New York since 1889 when Modell’s opened its first store in the big apple. The truth is, not all the companies purchased by REV are victims of the COVID-19 crisis, such as The Franklin Mint, Zoosk, or The Book People.
Lopez says that the boost in eCommerce business is not only due to the lockdown or the enforcement that bars people from going to retail stores. The fear of uncertainty in the current times has also driven pragmatic consumers towards online retail therapy. According to him, the business scenario for the brick and mortar stores would probably get worse before it gets better. And REV intends to save as many brands as possible under its roof.
The results of these purchases have been mixed, even though it is too soon to tell. But Dressbarn has had a good start under Retail Ecommerce Ventures and can be considered as an example of Tai Lopez’s genius behind the move. The women’s clothing store was purchased in June, and the July revenues forecast annual revenues of $65 million.
According to REV, the key to the brand’s success was to use the same buyers and vendors to start things with. They also hire former employees who have worked for the brand and know its intricate ways of functioning.
According to Lopez and Mehr, another key to the brand’s success is the extensive ads on social media and Google. The company has spent more than $600 million on digital advertising for all of the brands, which has been instrumental to their success. They have also remodeled the website to make it pleasing to the eye as well as improve the functional aspects like navigation and check-out.
There is no doubt that Tai Lopez has taken advantage of the opportunity provided by the COVID-19 crisis. But the reasons behind purchasing certain companies and the way REV is transforming the digital presence of those brands portray genuine intentions and pure genius. According to REV, the plans to buy three more brands are already in the pipeline.