The man saving Radio Shack
Image courtesy of Tai Lopez
The COVID-19 pandemic has destroyed businesses across the world, with the retail sector being especially hard hit. Brick-and-mortar stores rely on getting consumers in the door, which was near-impossible under strict lockdown rules. It was the worst year for retail sector bankruptcies since the 2009 financial crisis.
You may think the obvious thing to do is for these brands to simply convert themselves into eCommerce titans. History, however, shows that it’s much harder than you might think, because different skillsets are required. A brick-and-mortar store expert can’t simply turn into a technology guru overnight.
Retail Ecommerce Ventures has made waves by reviving brick-and-mortar companies thought to be already dead. Their co-founder Tai Lopez, 37, is a successful entrepreneur and eCommerce expert. He is buying up struggling brands with his partner Alex Mehr. They’ve quietly snapped up huge names such as Pier 1 Imports, Radio Shack and Stein Mart and begun to turn them around with huge success.
Their blueprint is something the retail world could learn a lot from in order to thrive in the irreversible trend of online shopping.
Making the Hard Choices
There are massive differences between running a strong retail store chain and running a dominant eCommerce store. Companies can fail because they try to use their existing personnel and tactics in an environment with different rules.
The toughest truth is that you simply don’t need as many employees. You don’t need people on the shop floor or managers and supervisors to watch over them. It’s understandable for sentiment to result in bosses holding onto their staff too long. Yet it’s better to salvage the business than to go under and lose everyone.
When Mehr and Lopez bought Dressbarn, they trimmed the staff numbers down from 9,000 to just 30. That’s over a 99% decrease. That’s not easy no matter who you are but it’s allowed the company to thrive and start to grow again.
Joseph Schumpeter, the legendary Austrian economist, outlined the theory of Creative Destruction. Right now eCommerce is a far better experience for many than retail stores and this innovation is changing the way society works. It’s impossible to fight against it for too long, which is something that Lopez understands.
To build something great, you must be willing to let go of what no longer makes sense.
There’s a reason that Lopez doesn’t build up brands from scratch even though it might be less of a headache in the short run. He chooses the more difficult path which is why he’s seen the success he has.
He quotes Kobe Bryant in explaining this philosophy, “Don’t try to recreate greatness. Go where greatness existed before.”
The key skill that differentiates him from other innovators is knowing what to keep, not just what to cut. By keeping core staff and branding, the companies maintain the brand identity that loyal customers love.
The tech savvy among you might not realize, but many people aren’t comfortable with making purchases online. They hear horror stories about stolen credit card details and think it’s better to do without. It’s easy to forget that in 2019, only 10% of retail sales were made online. It’s all about trust.
Take REV’s acquisition of Modell’s Sporting Goods for $3.7 million, for example. The company had an existing reputation for providing high quality, so according to Lopez:
“By buying Modell’s, the real value we are paying for is that little bit of trust where people go, ‘Yeah, I’ll put my credit card on that website because I’ve heard of Modell’s, my grandpa went there…’”
At Dressbarn, they kept on senior buyers who had vast industry experience and knew how to pick clothes their customers wanted. The average customer there was 50–70 years old; not a group famed for prolific online spending.
Nevertheless, the brand trust they have in Dressbarn encouraged some to make their first online purchases.
So you cut what you need to then you leverage the best assets of the company which is generally their brand. You could argue a competent CEO could do the first two steps.
Yet, where REV really makes a difference is through their technological expertise. Tai Lopez has a massive online presence with 2.7 million Instagram followers and over 10 million social media followers overall. He was an early adopter of using video on social media and has reaped the rewards. He’s a trendsetter rather than a follower.
The first thing REV does for acquired companies is redesign the website to maximize effectiveness. They use Shopify Plus which is a well-established, industry-leading brand to make the process as efficient as possible.
Next, they leverage the internet darling of dropshipping. This means they don’t need to pay expensive storage and warehousing costs. It enables the products to be available in more places online including Amazon as the logistics aren’t as taxing.
As REV has 13 companies in their portfolio, they can use their data to better price their future acquisitions. They have a greater understanding of the realistic transformative effects they can have. This is one of the toughest parts of the business they are in as it’s so easy to overestimate what changes you can make and end up overpaying.
Tai Lopez has managed to transform several companies that had billion dollar revenues but were losing money. All through a simple, yet effective blueprint.
While you might not be able to have his funding available to you, you could mimic what they’ve done on a smaller scale to save your own business.
Make the Tough Choices — Reduce your overheads and personnel to save the business.
The Nuance — Keep what is crucial to the business and maintain the trust the customers have in the brand name.
Modernize — Use the latest technology and advanced methods to make the best experience possible for customers in a cost-effective way.
Tai Lopez’s success is something everyone in retail can learn from. It is possible to save a failing brand through smart decision-making and by understanding his philosophies and applying them.
How Tai Lopez Transforms Bankrupt Retail Brands Into Successful eCommerce Businesses was originally published in Entrepreneur’s Handbook on Medium, where people are continuing the conversation by highlighting and responding to this story.