The following interview is a conversation we had with Melodie van der Baan, Co-Founder and CEO at Max Retail, on our podcast Category Visionaries. You can view the full episode here: $10 Million Raised to Help Retailers Sell Unsold Inventory.

Melodie van der Baan
Glad to be here. 

Brett
So, to kick things off, can we just start with a quick summary of who you are and a bit more about your background? 

Melodie van der Baan
Sure. So I’m Melody Vonderbaughn, Co-Founder and CEO at Max Retail. Before that, I was an independent retailer for nine years and a distributor for five years before that. So my entire career has been surrounded by inventory. 

Brett
And are you surprised that you ended up being an entrepreneur when you were younger? Did you always have that in the back of your head, or where did that entrepreneurship come from? 

Melodie van der Baan
I really fell into this because from my first company that I started, really, I didn’t go to college for fashion, and so nobody would hire me. So I actually went to the local art institute and found graduate fashion designers. And I said, hey, you have nothing to lose. Why don’t you pay me a commission and I’ll place you independent retail stores? So my first company began out of necessity for really wanting to be in this industry, and I figured it out, asking questions along the way. And from that experience, it led to my next company, which was opening my own store once again. Didn’t really have a path before me, didn’t have an education around it, but I knew I could figure it out because I had proof point from my first company. 

Melodie van der Baan
And sure enough, started the second company with a $25,000 investment and grew it to producing a million dollars a year in revenue. Wow. 

Brett
And early on, who were your inspirations? When it comes to founders? Are there any that come to mind that have just really inspired you along the way? 

Melodie van der Baan
Absolutely. And I’ve had the honor of working closely with my most inspiring Founder, which is Kieran McCammon. He was one of the co-founders of Poshmark and the CTO of Moda operandi. I plucked him off of the Internet when I knew I needed to create a marketplace and something about his blog stood out to me, that he was an extraordinary individual. And so I stopped the man for years and was able to get in contact with him. And now I’ve been able to work very closely with him, as he is our intern CTO. It’s such an incredible blessing. But what he’s taught me is really how to work with less haste and more speed. And he’s really helped me understand where I need to be patient in this Founder journey and what I need to push for things. 

Brett
What about books and the way we like to frame this? We got this from an author named Brian Holliday. He calls them quake books. So a quickbook is a book that rocks you to your core, really influences how you think about the world and how you approach life. Do any quake books come to mind? 

Melodie van der Baan
Absolutely. The book that changed my life and that I buy for every single person that works for me today is Ogman Dino’s the greatest salesman in the world. And it is a very small book, and there are ten principles in it. And the way you’re supposed to read the book is you read one of the principles the same one morning, noon, and night for 30 days until it seeps into your subconscious. And these are the most beautiful things. Like, I will form good habits and become their slaves, or I will greet this day with love in my heart. I am nature’s greatest miracle. I will persist until I succeed. And at 18 years old, I received that book as a gift, and I followed it. 

Melodie van der Baan
And to this day, I accredit most of my success to the principles that are planted in my subconscious from that book. 

Brett
Wow, that’s a pretty strong endorsement. I’ll be adding it to my Amazon cart here right after the interview. Now, let’s dive deeper into Max retail and everything that you’re doing there. So how we like to start this part of the interview off is let’s talk about the problem. So what problem does Max retail solve? 

Melodie van der Baan
Max retail enables independent retailers and brands to sell their excess inventory across a distributed network of demand that would otherwise be challenging or inaccessible for them to reach on their own. 

Brett
How’d you uncover this problem? Can you take us back and maybe tell us a little bit more about the early days of the company? 

Melodie van der Baan
Absolutely. So when I started my first company, I had a sprinter van. And this sprinter van, I loaded up with all of the collections of the designers I represented, and I would drive the sprinter van from South Florida up to Boston, over to Chicago, down to San Antonio and back, stopping at every single independent retailer to sell them the collections. And as this went on season after season without fail, when I entered a store, they would point out to me what didn’t sell from the season before. And in that moment, I had to solve their problem. The brands did not want to take back the merchandise. And yet, if I didn’t figure it out, they weren’t going to buy from me again or they were going to place a much smaller order. 

Melodie van der Baan
So what I started doing was paying attention to what retailers were doing well with products around the country. And if I was in Baltimore looking at a size run of striped dresses that were not performing well, but I knew they were blowing out in Birmingham, I would call that buyer in Birmingham and say, hey, listen, I have some more of those great dresses. It’s not coming from the brand, but how about I send them your way? And they would say, send them on over. Merchandise transfer complete retailer in Birmingham, happy retailer in Baltimore, satisfied and would write their order. But this wasn’t happening. Once in a while. This was an everyday occurrence. My husband saw it and he said, mel, this is not a you problem. This is an industry problem. 

Melodie van der Baan
This is a lack of a network that needs to exist between independent retailers, and you should create it. But this was, 20 09 20 10 20 11 this is before Jor and new order. Who really paved the way for our industry. This was before people were shopping on Amazon as casually as they are now. And this was before Shopify was a thing. This was before point of sales were cloud based. They were all server based. So the timing wasn’t right, but the problem was real. Then in 2012, I opened my own boutique in south Florida. And now suddenly I had a sale rack and no one was helping me. And I realized that it wasn’t $2,000 of dresses that were sitting on a rack. I now understood it was $100,000 a year of unsold inventory that was sitting in my store. 

Melodie van der Baan
And yet I knew that out there, someone needed the merchandise that was sitting on my sale rack, and they just didn’t know it was in my store. And, Brett, this drove me nuts for years until finally, toward the end of 2016, I said, I have just got to try to solve this problem. And so as a Founder, I didn’t know where to start. But my husband said to me, hey, Mel, Steve Blank has a course on udemy called the Lean startup. Start there. And so I watched the course and I went through the day in the life of the customer, and I just started calling brands and retailers and saying, hey, it’s Melody, your favorite rep, I’m a retailer now, like you. But I remember you had this problem. What have you been doing about it? And they said, nothing, mel. 

Melodie van der Baan
There’s been nothing to help me. And so after calling hundreds of customers, I kept going with Steve Blank, and I said, what is my minimum viable proposition that I can do here? Right. My minimum viable product was just to get on the phone and start facilitating merchandise exchanges between retailers again. And so as I did that, I started coming up with the process for how they could effectively work together. And there comes Kieran McCammon, who I stalked on the Internet and said, hey, kieran, hey, I’m just a retailer, but I know that this problem is real. How do I find someone like you to build it for me? And he said, well, you’re probably not going to find anyone like me, but here’s a company overseas, and maybe you’ll be able to afford them, and that’ll get you somewhere. 

Melodie van der Baan
So I worked with my then Co-Founder, Morgan, who I met through mutual friends, and she’s absolutely amazing. She’s been on this journey with me the entire time. And I like to say that she is the weight and I am the balloon, and she keeps me grounded. So as I’m pushing forward with the vision, she’s sitting there making sure that we’re executing day by day. And what were able to do was raise a little bit of money, bootstrap it, just ourselves and another close friend, and hire a team overseas first india to build the app, right? And were really figuring out the logic, Brett, and we thought we had it. And so now we get into 2018, and my husband says to his lifelong friend, Damon, in. And as you can tell, my husband is a very big theme in my life. 

Melodie van der Baan
And what I will say to any Founder is make sure you pick the right partner in life, because it can make you or break you. But he said to his lifelong friend, Damon, who was an engineer, hey, will you just look over this app that my wife built before she goes live with it? Just make sure it passes the giggle test. Well, Damon looked it over and he said, this isn’t anything useful. I could rebuild it in a month, Brett. We can call those his famous last words. Over the course of the next two years, Damon would architect our very first marketplace, which was a b to b marketplace for authorized retailers of the same brands to sell, buy, and swap merchandise with one another. 

Melodie van der Baan
And I would wake up in the middle of the night and beg Damon to work on it, because obviously he had paying jobs, and this was an unpaid job. And I said to him, damon, if you just build it, I won’t let you down. I will make this happen if you just build it. And so finally, in the spring of 2020, we go to launch, swap retail. Boom, February, and Boom, March, Covid hits. All the retailers across the nation are closed. So here I am, still owning my retail store, having two children under the age of three, and a startup that just launched. I am the product person. I am the salesperson, and I am on the phone onboarding independent retailers to list their excess inventory. 

Melodie van der Baan
And they were willing to, Brett, they were willing to list their excess inventory, but there was no one to buy it because the marketplace that we built was actually meant for other retailers to buy product from retailers, and no one needed anything. So that was our first and what still may be our biggest jolt in the company’s history. But we kept on. And so in the fall of 2022, we said, hey, all the retailers are opened back up. Maybe they’ll start buying, selling, and swapping now. But you know what they said? They said, we don’t want to buy. We have shipments to pay for. We don’t want to swap. We got bills. We just want to sell. And so we move into 2021. 

Melodie van der Baan
And my Co-Founder, Morgan and I, and Damon, and we look at each other and we say, we have got to find another way to solve this problem. Because retailers buying, selling, and swapping isn’t doing the trick. The prices don’t work. They don’t want to buy past season inventory from one another. And yet our customers really, they need to get this inventory out. So we began a relationship with guilt Group, and guilt group said to us, I understand that you have access to brand name inventory. We’ll buy it. And so we said, well, we got nothing to lose. So we sent out an email to what we thought was all the independent retailers. It turns out we sent that email to both retailers and brands. So, Brett, brands were not our customer to date. The independent retailers were. 

Melodie van der Baan
And the brands kept saying to us, why can’t you help me with my inventory? But we already knew that it’s very hard to sell a brand’s inventory directly, right? I had been a sales rep. I knew how hard that was, and I wasn’t going to make any false promises. But when we accidentally sent that email out, the response was overwhelming. Brands and retailers said, yes, we want to liquidate. And so we did a couple of transactions, and what we realized was the unit economics of liquidation worked for brands because they were only out the cost of manufacturing. But the independent retailers, they paid a wholesale cost. It was significantly more. And when they did liquidation, the pennies on the dollar math just didn’t work. 

Melodie van der Baan
And so we knew we had to keep looking for the right solution for the independent retailer, our true core customer. Yet meanwhile, for the first time ever, we made money. And so we had a member of our team who had 20 years off price experience. He said, mel, let me run with this. I can at least help add revenue while we figure out the other side of the business. And so we continued to build a liquidation division supporting brands with their excess inventory, which produced us revenue and was very helpful to get us through figuring out how were going to solve this problem. 

Brett
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Melodie van der Baan
And then in the fall of 2021, we met our first what would be fantastic sales channel partner. And that was Poshmark. And Poshmark came to us and said, we understand that you have access to brand name drop ship inventory. You have past season inventory. Our inventory is normally worn. You have inventory that’s new with tags, that’s premium. They said, give us a product feed and let’s see what happens. And you know what, Brett? We weren’t doing much on the b to b, so we said, let’s try it. We gave them a product feed. We added in how much they needed to make for their commission. We added in the shipping. And you know what? For the first time ever, we started seeing sales. We said, what’s going on here? We can sell product to end consumers that’s past season. 

Melodie van der Baan
And do this on behalf of our independent retailers because they don’t have time for this. This is their past season goods that they don’t want to spend any time on. Well, it wasn’t too long before another partner came to us, and they were an ecommerce website, and they saw the opportunity and said, you have access to brand name dropship inventory. Give us a product feed. And we said, well, all right, that worked last time. Let’s try it again. And we gave them a product feed and boom, more sales. So now, we’re in the beginning of 2022, and we’re understanding that these sales are coming in from getting the exposure of this excess inventory that’s sitting in the independent retailers nationwide, getting that inventory in front of end consumers through these zero inventory, third party marketplaces. 

Melodie van der Baan
So that’s how we spent 2022, is really following that path and saying, why do these marketplaces need this inventory? Why can they not get it on their own? And why will these customers not work with them directly? And that’s where we found a lot of good reasoning. And that is how we became Max retail today, helping our sellers get the most for their unsold inventory. 

Brett
And if we look at where you are today, what types of numbers can you share that just highlight the growth that you’ve seen? 

Melodie van der Baan
Yeah, absolutely. It’s been a wild ride. And I think the greatest number that I’m proud of is the amount that we pay out to our independent retailers. So in the beginning of 2022, the average payout to our retailers was around $151. And as of today, it is an average of $1,200 per month. So this is an independent retailer, if you’ll think of the favorite store in your local area that sells a number of different brands within it. These sorts of retailers are now being able to either pay utilities, pay for one of their employees, write themselves a check for the first time out of this revenue, our highest performing customers make over $20,000 per month. That is serious revenue. And even our smallest customers still make over 500. 

Melodie van der Baan
And that is one of the metrics that makes me most proud of what we’re doing today is really putting meaningful revenue back in their pockets that otherwise would be sitting on their sale rack. We’ve also five times growth year over year for the last two years. And in my opinion, we’re just getting started and our retention is off the charts. We have over 55% active users monthly. 

Brett
It seems like a no brainer pitch to the independent retailers. Is that right? Like, what do they have to lose by doing this? 

Melodie van der Baan
They have nothing to lose and everything to game. And the reason why we created Max retail to be that way is because I was a very pragmatic buyer in my retail store and I would never try any service that I didn’t know I was going to get value from. So we created this in such a way that we win when they win. Taking a transaction fee from every item. 

Brett
Sold makes a lot of sense. And just to visualize the market, how many independent retailers are there in the US? 

Melodie van der Baan
Like, roughly speaking, there are over 2 million between North America and Europe. And that is our target market for the foreseeable future. And the way I like to explain who our customer base is if you’re familiar with fair, which is a really fantastic platform to get the products from brands to independent retailers, Max Retail is the other side of the coin. For what those retailers do with the inventory that doesn’t sell makes a lot of sense. 

Brett
What about your market category? So in the intro there, I said an excess inventory solution. Is that the category or what is the market category? 

Melodie van der Baan
That is such a great question. And that is actually the greatest source of confusion that investors have. We get placed in a lot of erroneous buckets for the competition. We are actually e commerce infrastructure. That really is what Max retail provides is infrastructure. The ability for an independent retailer or brand to be able to sell their excess inventory across a network of demand that would otherwise be too challenging for them to do on their own. They don’t have the time or the know how. They can’t do the taxonomy. Their data is too dirty, their inventory is too fragmented. And so at the end of the day, I would say that we are more along the lines of a commerce hub or a miracle, really, a means for sellers to sell on marketplaces. That really is who we are. 

Melodie van der Baan
And I would say that we are more redefining that category and enabling it for sellers that otherwise would never have access to it. 

Brett
Are there any critics of this approach who don’t believe in this idea? 

Melodie van der Baan
That’s a great question. I think there’s always going to be critics, and if you don’t have critics, then you’re doing something far too easy or obvious, and there’s going to be a lot of competition in the space. But I heard most recently someone say, you might not be crazy, you might just be first. And I really lean into that because what I see is there’s so many solutions out there for brands. But these independent retailers, they are a complicated customer, but I understand them better than anyone else, and we know what makes them tick and we know how to make them act because we are them. Our entire team is deeply connected, whether they’re past experience, whether they’re family business. Right? We just get this customer better than anyone else ever will. 

Brett
As I mentioned there in the intro, you’ve raised 10 million to date. What have you learned about fundraising throughout this journey? 

Melodie van der Baan
I love fundraising. I know that sounds crazy, but I think the reason why I love it so much is because I don’t look at any conversation as a check that someone can write me. It is a door that is now open to a relationship. They now know me. They will now see this problem that I bring up to them everywhere they go. When they walk down the street and have dinner with their wife, they’re going to notice the sale rack on the corner, and they’re going to pay attention when they’re buying online, and they’re going to wonder if they’re buying from a max retailer. And I love that. What I’ve seen is fundraising is a lot like rushing a sorority or a fraternity. There are certain investors that you really think you want, and it doesn’t work out and you’re heartbroken. 

Melodie van der Baan
But then the investors that you end up getting, if you choose thoughtfully, are going to be the right ones that you were meant for. And that has been my experience. My investors are unbelievable. I have Anna, Barbara at M 13, Diana at the Artemis fund, and Michelle at standup VC. I have three rock star investors, and they are people that I cannot wait to speak with every single month. And they are constantly unlocking new opportunities for us. So to me, fundraising is an exciting time because I choose my partners very carefully, because I want that to be a trusting, valuable relationship. 

Brett
Let’s imagine you were starting the company again today from scratch. What would be the number one piece of advice you’d give yourself? 

Melodie van der Baan
Learn what the hell product is. I didn’t even know that was a word until, like, two years in. And someone said to me, you really need a product person. I said, oh, gee, I wonder what a product person is. And from my first product hire and seeing how that changed things and how that brought structure and prioritization and a roadmap, all of these were brand new terms to me. So if I were to do it all over again, I probably would have researched a little bit more what the heck product is, or I would have prioritized a product higher early on. 

Brett
Final question for you. Let’s zoom out three to five years into the future. What’s the big picture vision for Max retail? 

Melodie van der Baan
Oh, yeah. So Max retail five years from now is on five of the seven continents. Sorry, Antarctica. You’re probably never going to be one of them. And anyone who has an audience can tap into our supply and become a distributor of the products in Max retail. We see Max retail five years from now everywhere. Inventory is managed today and sold tomorrow, and we see this service in every independent retailer across whatever continent you visit. 

Brett
Amazing. I love the vision. We are up on time, so we’ll have to wrap here before we do if there’s any founders listening in that just want to follow along with your company building journey, where should they go? 

Melodie van der Baan
That’s a great question. You can find me on LinkedIn. I’ll be happy to connect with you. Otherwise, you can check out where we’re being featured@maxretail.com on our press page. And to any founders out there, I would say don’t go looking for a problem to solve. Solve the problem that haunts you day and night, and you will never want to remove yourself from it. 

Brett
Amazing. Love that advice. All right, Melody, thank you so much for taking the time to chat. It’s been a lot of fun. 

Melodie van der Baan
Oh, I hope it’s been helpful. Brett, thank you so much for giving me the time. 

Brett
No problem at all. Keep it dutch. This episode of Category Visionaries is brought to you by Front Lines Media, Silicon Valley’s leading podcast production studio. If you’re a B2B Founder looking for help launching and growing your own podcast, visit frontlines.io podcast best and for the latest episode, search for Category Visionaries on your podcast platform of choice. Thanks for listening, and we’ll catch you on the next episode.