John Sammons: Yeah, so 2023 opened up the bin store that was called Ugly Box Retail. Started just as a bin store, morphed a little bit more into a hybrid model. So the bins, we went 75321 was our price points. That was our week in, week out. Started on Friday, just like a lot of other stores do. And then part of the hybrid model was leveraging some... Zac: Okay. Go home. John Sammons: higher end product to selling different sales. had a retail section at times. Other times we would do what we'd call a 50-30-10. So instead of starting at seven, we'd start at 50, bring in some higher value product and sell it at 50-30-10. So doing some other sales like that outside the bins, but essentially we were, we were a bin store. So that was kind of how I got into liquidation a few years ago was with that business. And then as we developed and tried new programs, ⁓ tried a major appliances load. I saw a lot of potential with that and it kind of organically that side of the business morphed into Red Tag Warehouse. We rebranded to Red Tag Warehouse about a year ago and then as that business grew up, kind of got to a point where to scale one of them, I thought it was the best move to close down the ugly box. We just recently So that was about six months ago we closed down ugly box and just recently opened our second red tag warehouse. So primarily we're selling appliances and mattresses and flooring and then some furniture as well at those locations. Zac: Okay, started with the Benz store model. you, 2023, so you operated that for almost three years, really close to three years. Were you profitable, do you feel like, for those two years, or did you struggle to keep loads coming in and keep the lights on? John Sammons: Little over two actually. I might have my date wrong, but yeah. No, finances weren't really part of the considerations and shutting down that store. We were definitely profitable. You could argue, it worth the amount of work it was? I guess that kind of depends on your viewpoint, but we made money. Obviously, just like anybody else, that model, ⁓ profits can fluctuate a little bit harder than some other industries. I mean, we'd have our share of bad loads and lose money here and there, but overall it was profitable. ⁓ The financial part of it... didn't really factor into the decision to close it. I just thought the appliances, mattresses were a more scalable model, less variables in the operations, and that's kind of what led me towards this business. Zac: That's one of the questions or something I have notes written down, is how much, what a lot of people don't factor in when they're operating any business, but especially in liquidation, they don't factor in the time aspect. so operating a Benz store, how many hours do you think you were physically yourself working in that store versus today with the appliances and furniture and mattresses? How does that compare for you personally working? John Sammons: not even close. So having the one bin store, I would put myself around 90 hours a week and now with the two appliance stores I probably work 60. Zac: Yeah. And he said it's way more scalable model, inventory is easier to track. It's way harder to steal a massive refrigerator or than it is like to pocket a bunch of crap coming out of the bin. mean, when you're talking about, you know, trying to scale with employees and customers and everything else, you know, we've, we've looked at a lot of friends that do the appliance business and the margins are there. Obviously you have to sell fewer units. John Sammons: Yep. Mm-hmm. Right. Zac: on the appliance and furniture side than you do on the bin store side. From what I've seen in the loads that we've sold, the margins are a little bit better. It's easier to forecast. I can buy, and I'm sure you are buying now, scratch and dent or new appliance loads versus kind of the crap shoot that high piece count can be. You rarely get, unless your supplier's just... an asshole. Like you're buying an appliance, you usually know the condition of the appliances before you bring them in and so it's a lot easier to like, it's more of a check-in process rather than testing a bunch of units. And the mattresses I imagine, I checked at your website, so the mattresses that you're buying from what I understand and what I've seen on the market, it's kind of the same way. I you're not buying... I assume you're not buying return mattresses and selling them. It's overstock mattresses. John Sammons: No, those are out there. ⁓ I only do new single skew mattresses. You can get mixed skew, you can get three pale returns. I don't really deal with those. I know some people do. You can get them really cheap, them really cheap. I like the simplicity. I like to have 10 to 12 mattresses at any time. I pop one on display for each model and stack the rest in the back and sell them off. When I sell out a model, I fill back in with the display. Pretty simple. Zac: Yeah. Yeah. Yeah. So how many, I'm out of curiosity because mean, stores in general are kind of like, I'm not a joke, but like there's a running joke, obviously that mattress stores have to be a front for drug runners or something because you see all these mattress stores and like, how does one operate a mattress store? like the last time I can't, I've never bought a mattress in a mattress store. I always order them online. So how many mattresses out of curiosity are you selling like to walk in traffic a week? John Sammons: Pretty simple. Yeah, really interesting that you bring that up and I've definitely heard that joke before. So the mattresses are a little bit of a new addition to our business. We've probably only been doing those for four or five months here. At my first location, I'm selling... Multiple multiple mattresses every single day at our newest location. That's only been open for a month ⁓ We're only selling one or two mattresses a week right now So the balance between appliance and mattresses at the two stores are very outweighed the first location. I'm probably selling 30 mattresses a week and the other location. I'm only selling a few ⁓ If you look at do a little bit of market research on the two markets, I'm in ⁓ one of one of my locations isn't a very Zac: Uh-huh. John Sammons: It's in a larger market that has a mattress store on pretty much every corner and we're definitely seeing ⁓ getting drowned out a little bit by all the noise there. ⁓ But I'm sure over time it will build up as we get more of reputation as having the great price points. Zac: No, 100%. Are you able to offer payment plans and stuff to be competitive with your traditional appliance and master's retailers, are you able to offer the same financing options? Or similar, I guess. John Sammons: Mm-hmm. Yeah, we partner with a couple third parties. So one of them is a traditional financing and we can run different programs through them, whether it's six month interest free, 12 month, 18. And then we also do a no credit check. So some States are, it's legal to do that. And we are one of them. So you don't have some people like the no credit check option, just some income verification and the approval rates on those are a lot higher. Yup. Zac: over Yeah, because you're in Fargo, North Dakota, is that correct? John Sammons: Yeah, we have one store in Fargo, North Dakota, and then one store in Minot, North Dakota. Zac: Okay, that's a lot of mattresses. mean, the one store at 30 is a lot of mattresses. To me, we're in St. Louis, Georgia, we're 30 in South Atlanta, we've got the U.S. Olympic soccer team facility, we've got the Trillith movie studios where they used to film the mark. We have a big population of people and I still think 30 mattresses would be a lot for someone to sell down here. So to hear that a discount retail in Fargo, North Dakota is selling 30 mattresses. John Sammons: Yeah. Yeah. Zac: a week is incredible. The margin on mattresses is typically, at least when you're buying them in the liquidation space, is great. mean, that's one thing like, I think it's great in general, but it has to be even better when you're buying them liquidated versus the traditional avenues. ⁓ I'm also guessing your overhead is also substantially low. John Sammons: Yeah. Yeah. And it's no work. Yup. Yup. Zac: as far as like employees and stuff like that, how many employees did it take to run your bin store versus employees that it takes to operate an appliance and mattress store? John Sammons: Yeah, so the bin store, I kind of calculated out in terms of labor hours versus employees, because you can have some full and part time. I think the bin store, without it being right in front of me, I calculated it took about 220 to 240 man hours a week to run, somewhere in there. And then the appliance mattress store is 100 at most. So two and a half employees. Zac: Right on. Yeah, so you're looking at like, yeah, versus six full-time employees for the bin store space by the math. That's incredible. Capital wise to get started, I know like we've opened several bin stores, you know, it takes several loads to get going. ⁓ When you pivoted to the appliance and furniture and all that, did you, how much capital do you think you had to kind of... John Sammons: Yep. Zac: start with if you hadn't had the Benz store first if you straight up i'm opening an appliance and master store um did you do it in phases where you i mean obviously you're just adding mattresses to a lot of locations but did you like start smaller as you dump several appliance trucks in your store at one time John Sammons: Mm-hmm. Yeah, so when I had my BinStore ugly box and we started bringing in some appliances before we officially rebranded Red Tag Warehouse, we started very small. So I remember our very first truckload of appliances. It was a semi-truck of Lowe's Returns. I think there was about 60 units on there. I remember bringing it in and the first day we sold seven appliances. And then it just kind of went from there. We were running one load at a time and then we were running two loads. ⁓ Zac: Yeah. John Sammons: and then to open our Fargo location. So that was really starting from nothing. We didn't have a business over there. ⁓ I think we started that one off pretty aggressively, well over six figures in inventory for that. But you can definitely start with as little as 25 grand for an appliance store if you want to go full truckloads. Zac: Okay, I asked this question to the guy before you, and he does a hybrid bin store model. ⁓ location, how important is location to what you're doing today? Do you need the foot traffic or are you in locations where people are coming to you because they saw ⁓ a Facebook post or an Instagram or whatever advertisement, they're coming. They know you sell mattresses. I'm here to buy a king size or are they walking in off the street? John Sammons: Mm-hmm. Yeah, I know some people have a really cut and dry answer to that question. Mine's a little bit more transient. So one of my locations, I get zero walk in foot traffic. We're in kind of a little tucked away corner of the city. ⁓ and then the other location we're on a very visible location. The way I kind of looked at it when I signed that lease on that building is, it worth another X thousand dollars a month for the marketing I will get from the drive by traffic? And if the answer is yes, for a given location, I think it's worth being in. And if the answer is no for the location, don't think it really matters. If you look at the way most of us market at this point, it's all through people's phones. So where you are exactly, I don't think is super important. Zac: Yeah. the money on rent. Out of curiosity, what ⁓ the price per square foot out there in Fargo ⁓ commercial space? John Sammons: It really depends on what kind of building you're getting into. ⁓ Zac: Yeah, mean like retail versus versus warehousing. We do a lot of warehousing space down here. I was just curious if you were like comparatively speaking. John Sammons: Mm-hmm. I would say average is about seven. Zac: Okay. It was about half. We get 12 to upwards of like 17 depending on the size of the building. for warehouse space down here. it's, our town has, like I said, with the movie studios having moved in a few years ago and the Olympic soccer team, they're building a massive facility down here. mean, John Sammons: for warehouse or for retail. warehouse. Gotcha. Zac: I mean the real estate in general has just like popped off down here so it's definitely been wild to see. John Sammons: I'll tell you what, whatever I save on real estate, I lose on freight. I'm it's pretty bad up here. Zac: Yeah, I imagine the average freight rate is probably, know, Florida's a terrible place to ship into, but I imagine ⁓ North Dakota, I don't know that I've done this now for 15 years, and I don't think I can honestly say I've ever shipped in a load, in a load or out a load out of North Dakota. So ⁓ where is most of your product, I mean, on the coast, like what coast is it coming from? What's the average, I guess, what is your average freight bill? John Sammons: Mm-hmm. Four, four to five. Zac: Four or five grand a pop. Yeah, wow. That adds up very quickly. John Sammons: Yup. So yeah, I hear everybody else complaining about 2800, 2500. Zac: You got nothing on me. No, that's something you got to factor in. I mean, every single one of them. This would be one of the, you know, try to wrap up and not keep you too long, but what percentage of retail, because again, every market's different, the freight and everything else, what are you guys traditionally recovering percentage-wise to retail on, I guess, all of your product, but primarily the appliances, the mattresses? John Sammons: Nope, nope. Every market's got their positives and negatives. Yep, definitely. Yeah, so if you bought an appliance from me versus Home Depot or Lowe's, you're saving about between 20 and 35%, depending on the model and the category and condition, of course. And then mattresses are a little bit more aggressive. Those are gonna be 40 to 50 % below. That's usually where those kind of fall. Zac: well. Do you have two different price points if it's finance or not like cash price out the door or if it's finance do you discount a dollar it's just a flat you're paying 80 % of MSRP or Home Depot. John Sammons: Pretty much like that, other than charging 3 % on cards, we just have a card price, cash price, but we don't mess around too much with the financing. Zac: Yeah. Gotcha. I know you say about 30 matches a week, appliance wise, mean, know obviously there's several different fridges, stoves, whatever, but number of appliances you're moving through over there. John Sammons: Yeah. Probably 40-50 a week. Zac: Do move an almost full truck through that store every single week? Wow. That's great. I definitely like the switch from the bin store model to the appliance model. It's a lot more sustainable. don't see, you know, we're having, a lot of people are having issues with supply chain with their bin stores and making sure they get product, you know, every single week. But two things you're doing with the appliances or you bring in appliances, one is a less competitive market, but John Sammons: Yeah. yeah. ⁓ yeah. Yep. Zac: as far as like on the buy side, but two, your recovery price is incredible to me. Like whenever we've gotten in appliances, we've sold appliances, we weren't able to recover 70 % of retail or 80 % of retail. most of our clients, they want to be more aggressive to buy from a discount. There's also a lot more competition down here, I have a field in Atlanta than, yeah. John Sammons: Right. Yeah. Well, that's where all the product comes from. So I think it's pretty natural that there's a lot of competition down there. We don't see a lot of stores like ours up here. And part of it's that freight costs is being significantly higher. ⁓ Everything factors in ⁓ to kind of the different, the differences between our markets. But that's something I've noticed is a lot of, a lot of your part of the country is a lot more congested with stores like mine versus up here. There's not a lot. I think that's part of the reason why we're able to move so much volume is we're kind of the only discount option in the area. And we've really positioned ourselves to, because I know even within the scratch and dent business. Zac: deal with. John Sammons: Sometimes you're going into somebody's store and you don't even know if like the appliance is gonna work. We really try to position ourselves as you're getting the exact same thing, maybe a couple of scratches out of the box, but you're getting the same level of service that you'd get at any other appliance store. So I think that's something that also factors into us having that really high recovery percentage. Zac: your position, yeah, less as a discount retailer and more just as another option for appliances that we offer them at a discount. It's a big difference in that, like, it sounds the same to people, but like, I'm not a discount retailer, I'm just a retailer offering discounted pricing. And when you position yourself that way and your customers walk in and they ⁓ see, I'm guessing your store is probably way cleaner than the average discount store. You probably present way different, and that commands John Sammons: Huge. Yeah. Zac: People don't realize that presentation does matter and when you can present your product in a way that makes the customer feel they're getting a premium, you can command that higher price point. that's a huge thing that... John Sammons: couldn't agree more with that. You attract a different customer too. Zac: Yeah, don't, sometimes like the discount customer, and I've dealt with a lot of them in last 15 years, there's like levels to discount. There's people that want, there's bargain hunters, there's people that want a discount. The discount shopper's great, but like sometimes they want more more more and more of a discount. There's a difference in what you're doing, I feel like. Again, you're offering your client the same appliance at a discount than you are just a flea market. John Sammons: Yeah. Mm-hmm. Zac: There's the flea market customer and there's the shopping mall customer and you want to capture that shopping mall customer more so than the flea market customer just because that flea market customer has usually less that they want to spend on that same unit. What you get for something versus what Joe gets at the flea market, same unit, he's probably getting half of what you are only because of way you're presenting your stuff which is a huge learning, a huge lesson I think for a lot of people to stop and ask yourself how you're presenting your product. John Sammons: Mm-hmm. Mm-hmm. Definitely agree. Zac: Well, if you had to tell people, obviously you made the decision, appliance store or bin store, would you suggest, I don't want to give you more competition and take loads off the market, but if you had to go back and do it, you stick with 100%. Yeah, would you stick with it? 100 % you're glad that we've... John Sammons: I'm not concerned. It's all about having the right relationships. That's how you source. Zac: We're happy with the pivot, the decision to pivot to an appliance store. Sounds like a good one. ⁓ It doesn't seem like you'd go back and do it another way. You'd stick with this call to keep pushing with the appliances. Any plans to open more than two? Are you looking at branching out even more after the two locations? John Sammons: Yeah, I wanna have 10, I wanna have 20. ⁓ I wanna have as many as make sense. Hoping to have a third one here pretty soon. Two within a year is a start and we're only going up from here. As far as kinda your comments on would I go back? ⁓ I wouldn't, but I think within any business you can make money or can lose money. I know you're opening a bin store here pretty soon and I wouldn't advise you not to. I think it really comes down to the individual and what their goals are. I think a bin store is great, especially if you want to be an owner operator and somebody who really has their hands in the day to day. Because I think a bin store really thrives under that model where the owner can be really focused on being able to pivot between ⁓ different sourcing opportunities because as we know those are constantly changing. ⁓ but also to be really cognizant of what the best sales channels are for these general merchandise loads they're bringing in. So if an owner wants to really get in and get their hands dirty, think a bin store is a great business, but if you want a more scalable model, I think you just need something with less variables, and that's kind of what I was looking for. So that's why I made the change. But as far as what I would say to other people, I think it really depends on what you want. Zac: Yeah, no, I the amount of time you have to invest in it, the cost of your product, one reason for us opening the store, obviously we're promoting that we're doing it in 21 days, is we own the real estate and for us it's an easy way, one, the product cost that we have is impossible to get, it's not traditional product, to put it lightly. We own the building, there's so many kind of... Positives for us that we also we don't look at it as a super long-term business I look at this is how long can we operate before it dies? Because the hype always goes down for the bin store because we've opened several over the last 15 years and For us we own the building, you know, obviously we've negotiated a very, you know generous lease for ourselves ⁓ But the goal isn't I'm not trying to make eight nine ten bin stores I want to run this one for as long as it's profitable for as long as my John Sammons: Interesting. Yeah. Zac: my product line that we have exists. Once that product goes away, the Benz store goes away, right? And then we'll either we'll rent the space out to somebody else or, you know, I like the same, I love the appliance models. It's again, it's a little bit more expensive for us to start and open, but it's something that I can stick to. You've got two, three guys in there. It's a sales team and you can scale that if that's the route you wanna go. For us, John Sammons: I love that. Zac: You know, we're all about the real estate. We like to buy the property. We put a business in there and then if we can, our goal is to rent it out. And then we move the business out. Because the nice thing about liquidation is it does not take a whole lot of effort to start a business and open it. Cash wise, there's cash involved, but the actual like the physicality of it will have physically put all of this stuff together in a total of four physical days. Same, assuming with an appliance store, if you wanted to do it, you can do it. in a short amount of time and you can move it out in just as quick a time and move it to a different location. So for us, we find a building, we buy the building, we open a business in it, we rent the space, we pull it out, we move on to the next one. ⁓ John Sammons: I love that. Do you have experience kind of with that model before like the get in get out once you have a tenant or is this kind of the first time you've tried that? Zac: Yes, we are, we did the math the other day. We're right at 50 doors. We started in real estate when we started liquidation. With our content, I want to get across to people, when we started, my wife at the time, I looked at her, I said, I don't want to do this forever. I don't see liquidation being a super easily scalable thing to do, just because of the product flow. I said, but it's... I mean, this is back when Kmart was $50 a pallet. First of all, when Kmart existed is when we started and we were selling Kmart pallets for $350, paying $50. So the margins are stupid. It's throwing off cash. We we need to buy real estate with it now. 15 years down the road, it'll cash flow. We'll have passive income. We won't have to work. Fast forward to today. We're at that point. The real estate throws off as much, if not more cash than the liquidation business does. And now we're in a position where it's a lot more fun to do both businesses because there's deals we can pass on because we don't need the money. ⁓ But as far as the real estate side of things, this is kind of the direction we're going is we are able to identify the property, buy the property. If we don't have a tenant lined up, then we can be the tenant in the interim. ⁓ And there's never a spot where we're paying a mortgage that we, you know, for nothing. ⁓ So that's kind of our... Long-term growth is coming from the real estate. It's really hard to scale some of these liquidation businesses. to some degree, right? I mean, we're always dependent on somebody else fucking up, really, right? Like, we're hoping Amazon doesn't change something and process more. you know, we're literally, we're betting on the retailers not learning a better way to do this stuff. ⁓ you know, how long would, it'll always exist to some degree. It's definitely in the last 15 years I've seen it. I mean, the margins were here and they're just. John Sammons: ⁓ yeah. Yep. ⁓ yeah. 100%. Zac: They're just getting smaller and smaller and they'll continue to do that. And so you can do one of two things. And one of those things is what you're doing, which is pivoting yourself in a way where you're not a discount retailer. You're retailer offering a discount. And I love that because you're not having to worry about your cost of goods could go up significantly before you really feel the squeeze. Whereas the guy is selling them for 50 % of retail. Loads go up by 5%. They're going to... feel that squeeze really, really hard. And so I think that, you know, it's a big takeaway from all this is put yourself in a position where you can charge that premium. It's not really a premium, we think of it as a premium price, but it's really, it's still not a premium price, it's a discount price. But with all that being said, if you had, this would be the last question, I'll wrap up and we'll actually get out of here in 30 minutes and it's almost five o'clock. Oh, it's five o'clock my time. I don't know what the... John Sammons: ⁓ yeah. Mm-hmm. Zac: times like out there, but any advice before we wrap up that you'd give to somebody that's going, okay, maybe I should take the chance, invest $40,000, $50,000 and open the appliance and furniture side. John Sammons: Mm-hmm. Yeah, I would just say talk to everybody. Ask questions. That's the only way you're going to learn. either learn from your own mistakes or you learn from talking to somebody else. I'd say that's probably my number one piece of advice for someone just getting into business. Talk to everybody. Meet people. Ask them. Zac: It's a whole lot cheaper to learn from someone else's mistakes than to make your own. John Sammons: ⁓ yeah, ⁓ yeah, and you'll still make plenty of your own, don't worry about that. Yup, Mm-hmm. Yeah, thanks for invitation. Zac: Yeah, for sure. Well, cool, man. I appreciate you the time to sit with us and share your business. Yep, thank you so much. And I'm sure we'll talk soon. I appreciate you again. John Sammons: Yeah, let's do that. All right. Thanks, Zach. Zac: Thank you.