Human beings are wary of strangers, and the unknown, and that is especially true when it comes to online shopping, according to Tai Lopez and Alex Mehr.
That is why they have been investing millions to buy up beloved – and bankrupt – retail brand names.
Their latest acquisition, finalized August 14, is the brand name, trademarks, domain name, and “Gotta Go To Mo’s” jingle of the 131-year old retail chain Modell’s Sporting Goods.
A subsidiary of Mehr and Lopez’ company, Retail Ecommerce Ventures (REV), bought the Modell’s assets for $3.64 million following the bankruptcy and liquidation of the sporting goods chain.
Lopez and Mehr believe the Modell’s name is powerful enough to convince someone searching online for a soccer ball or exercise equipment to click on the link that says Modell’s.
Sporting goods is a great vertical to be in, “and Modell’s is a well-known and beloved brand in that vertical,” Mehr said.
“By buying Modell’s, the real value we’re paying for is that little bit of trust where people go ‘Yeah, I’ll put my credit card in on that web site because I’ve heard of Modell’s, my Grandpa went there. I’ll put my credit card in to buy this soccer ball’,” Lopez said.
That is the strategy behind all of the brands the pair have purchased recently. They see the current economy as a buyers’ market for distressed retail – brands with valuable names that failed because they were late to the e-commerce game – and they have been going on a spending spree.
In July they paid $31 million for the Pier 1 name and e-commerce assets, outbidding private equity heavy hitters. They also acquired the Linens ‘N Things brand this year, and last year bought the Dressbarn brand name and e-commerce assets, both for undisclosed amounts.
REV also owns the Franklin Mint brand as well as FarmersCart, an online meat and grocery site, and MentorBox, a subscription service for business and self-development books and courses.
Mehr and Lopez don’t fit the typical profile of retail investors. Mehr was a NASA scientist before founding, and later selling, the online dating site, Zoosk. Lopez is a social media celebrity who became known for his business advice and motivational courses and who accumulated 2.8 million Instagram followers and 1.3 million YouTube subscribers before launching REV.
After REV buys a brand, it relaunches, or refreshes the website. It also plans to sell products under Modell’s, Pier 1, and other brand names on Amazon
“Our ultimate goal is how can we get people what they want in the way that’s most convenient for them,” Lopez said. “If that means we need to list our clothing on Amazon’s or Walmart’s marketplace, so be it.”
Modell’s. a fourth-generation family-owned business with a flamboyant CEO, Mitch Modell, filed for bankruptcy protection March 11 and is now liquidating the business. It had 153 stores, primarily in the Northeast and Middle Atlantic.
In February, Modell made a YouTube video asking for outside investors to help the company stay alive. “People love our brand,” Modell said in the video. “It’s not a tarnished brand. The model is broken and that’s why we’re changing it,” he said.
In a 2017 interview on Fox Business, Modell said the chain had been hurt by Amazon and other e-commerce sites, but that he believed sporting goods customers still wanted to shop primarily in stores. “There’s nothing like touching and feeling the merchandise” – pounding a glove or swinging a bar, Modell said.
Mehr and Lopez believe the value they bring to brands like Modell’s and Pier 1 is that they understand that e-commerce now must be the primary sales driver.
“There’s a shift in the world and that shift is from brick and mortar to e-commerce. I’m not sure all the old guard [brick and mortar retailers] will be able to handle the new world,” Lopez said.
“There’s so many things you can do with a brand like Modell’s. With stores you’re limited to square footage,” he said. Online, “we’re thinking of all the concentric circles to Modell’s Sporting Goods that we can expand into immediately” – categories such as exercise bikes, gym equipment, or baseball trading cards.
The new Modell’s website will be up by the end of September, Mehr and Lopez said.
REV recently bought two warehouses to serve as fulfillment centers for its acquired brands and it also uses third-party fulfillment, Lopez and Mehr said.
REV isn’t ruling out adding a limited brick and mortar presence for its brands in the future, but Mehr and Lopez are convinced the future of retail is online.
“You need to be mostly e-comm,” Mehr said. “Brick and mortar plays a role in retail but it cannot be 80% of revenue. It won’t work.”
When REV purchased the Dressbarn brand, it hired some former Dressbarn buyers who “understood the ongoing business model” of the company,” Lopez said. It plans to do the same with Modell’s.
“We’re following our same plan of blending the old school business people who understand the brand and know Modell’s,” with REV’s e-commerce skills, he said.
Lopez said he doesn’t know yet if that old school/new skills blend will include any role for Mitch Modell as a company spokesman, but he said the new owners of the brand have spoken to Modell post-acquisition. “He’s very proud of the brand and he wanted to talk and build s relationship,” Lopez said.
Of all the brands REV has acquired thus far, Lopez said, the Modell’s deal has triggered the most reaction on social media.
“I can’t tell you how many people – just every day, ordinary people from all over New York and Pennsylvania and that area saying ‘Hey I’ve got great memories’,” he said.
He and Mehr are betting those memories will make Modell’s a familiar, and much clicked on, name on the web going forward.