The highly successful entrepreneur, Tai Lopez, who is probably best known for his series of viral “Here in My Garage” YouTube advertisements back in 2014, has recently embarked on what could be called a somewhat unconventional approach to retail commerce.
After founding Retail Ecommerce Ventures in 2019, Lopez has been purchasing a number of well-known brands that were failing, such as Dressbarn, Pier 1 Imports, Modell’s Sporting Goods, and Radio Shack, shutting down their brick and mortar operations and switching to a digital-only approach.
The idea behind this tactic is to benefit from the pre-existing momentum and reputation that these renowned yet distressed retail brands possess and turn it into economic success.
So is Tai Lopez a winner once again, or are these brands simply a waste of time and money and better off left to fade into obscurity? Let’s find out.
Meet Tai Lopez
For those of you who are unaware, Tai Lopez is an entrepreneur and investor and a partner, consultant, and advisor to over 20 multimillion-dollar companies.
After living most of his 20’s and 30’s with little to no money, jumping between jobs, he eventually decided to take control of his life and head out on a quest for knowledge, traveling to over 51 countries and seeking mentorship from some of the most successful businessmen in the world.
Coupling this experience with his appetite for learning and self-improvement, Lopez quickly made a name for himself in the business world until he became the well-known founder, entrepreneur, motivational speaker, consultant, and mentor we know today.
This led him to become a multimillionaire before the age of 40, embodying the fairytale of the true rags to riches story.
Retail Ecommerce Ventures (REV) - It’s all about the brands
Many experts have been predicting the demise of brick and mortar retail stores even way before the pandemic came along. Over the past decade, consumer behavior has been changing quite dramatically.
Now we are seeing a huge shift towards digital purchases, which has left businesses across almost every industry with little choice but to adapt or see their share of the market dwindle away to their competitors.
“If you don’t change with the world, you disappear. And our world is going digital,” says Lopez.
Their original plan was to acquire huge brands such as Barnes & Noble and Forever 21; however, the cost for securing the intellectual property rights to these massive stores didn’t make economic sense and would be too risky of a proposition to take on board - at least for the time being.
Instead, they opted for declining retail brands such as Pier 1, Radio Shack, Ralph & Russo, Dressbarn, and Stein Mart.
In just a short time, Retail Ecommerce Ventures developed a strong track record for successfully rebuilding troubled retailers as eCommerce brands, and they are showing no signs of slowing down any time soon.
With that said, let’s take a look at a couple of the reasons why this risky play is turning out to be a stroke of genius.
Big brands at discount prices
Thanks to the global pandemic, McKinsey estimated that the eCommerce sector grew ten years within just three months in 2020. This makes it one of the best times to launch an online business, but why start a brand from scratch when you can buy an already established one for rock bottom prices?
Lopez recognizes the enormous value of the IP that these failed companies possess. The fact that their brick-and-mortar stores were closing did not mean that their brands were unfavored or that people all of a sudden disliked their products.
In fact, it was a sign that the company’s current business strategy was simply not working in its current form, and that something needed to change. This is largely due to brick-and-mortar establishments’ high operating costs.
REV’s strategy is to eliminate the most troublesome component of their business, which in most cases was the physical assets that belonged to the company.
Once they removed these factors, they began focusing all of their efforts on creating an excellent customer experience online while leveraging the brand’s public perception.
In many cases, the branding of these retail stores is, in fact, the most valuable asset they possess. Not their huge stores, leaseholds, or even their stock. It is the brand’s perception that keeps customers loyal, and that is extremely hard to replicate.
Most of the brands that Lopez has acquired so far have been carefully nurturing their brands for years, if not decades - and having the ability to purchase the rights to the highly valuable intangible assets is akin to purchasing the rights to a perpetual gold mine.
That is if you have the business acumen and resources to transition their business operations online, which Lopez seems to have in leaps and bounds.
Digital adoption is rapidly increasing
As more of these brands fail and the prices for purchasing their rights decrease, the potential upside for Lopez increases dramatically. This is especially true when you consider just how much consumer spending habits have changed over the past couple of years.
The reality is that many consumers who were previously hesitant to utilize digital services and purchase products online have been pushed to do so out of necessity.
Those who were fearful or distrustful of buying online have now become aware of the advantages and convenience of online shopping. A whole new demographic of shoppers are entering the online space - particularly the older generation (which are also the most wealthy and have the most disposable income).
It’s expected that the vast majority of these new digital consumers will continue to make purchases online, even once Covid-19 has been fully resolved, and we return to “normality.”
Final word
So far, things have been going well for Lopez and his partner Mehr, who are still looking for more retail companies to add to their portfolio. As it turns out, purchasing the IP rights to dying brands of major retailers and giving them a digital makeover seems to make a lot of sense.
Customers are expressing their gratitude by shopping at their favorite brands’ new eCommerce stores.
As consumers get more comfortable with making purchases online, it’s safe to assume that Lopez’s “risky” move will turn out to be one of his best and most lucrative business decisions.
