Growing EBITDA Beyond 2021: A Message to PE Investors

Merchandise Returns Reduction: The Time is Now.

In 2019, when retailers still considered returns as a “cost of doing business,” Newmine pioneered the paradigm of Returns Reduction, knowing that simply managing or mitigating the costs of returns is insufficient and unsustainable. The sharp growth of eCommerce in 2020 propelled product returns to an even greater drain on retailers’ bottom lines—threatening their very survival.

As a Private Equity firm, there is no more important mission than creating value for your investors.

The firms you choose to invest in must show strong growth potential as well as “fixable” issues. The efficiency of effort to move companies forward is always top of mind and sometimes a limiting factor that governs growth—there is only so much brainpower available.

Product-optimizing tools that can be individually and rapidly deployed to improve value across a portfolio of holdings will accelerate growth and make your firm more efficient.

“Best of Breed” Artificial Intelligence (AI) tools that free people in your organization and your holdings to perform higher-value tasks. It’s like having a digital worker to assist your staff.

Not only does AI benefit existing holdings, but when it’s employed in due diligence efforts it uncovers hidden value early in the evaluation process.

For PE firms operating in the Retail industry, the product returns tsunami that is engulfing most retailers is one of the fastest-growing drags on the bottom line.

Everyone in the organization recognizes it, but no one owns it. Until now.

Newmine’s Chief Returns Officer^® is an AI-powered anomaly detection platform that drives returns reduction by automating root cause identification, prescriptive action assignment, and outcome predictions. Chief Returns Officer’s collaborative workflow tools enable teams across a retail enterprise to address returns in-season, reduce returns, and recover the lost sales revenue attributed to spiking return rates.

The onboarding is seamless: Chief Returns Officer requires only a data feed to get up and running and operates in the cloud. Its AI-based technology immediately begins isolating correctable issues, flagging them, and providing the appropriate stakeholder with prescriptive actions. For the PE firm, upside growth evaluations immediately gain more empirical data points. Your staff can cover more ground and gain efficiency.

Attacking the root causes of product returns has a positive effect on both the bottom line and the top line.

Identifying the root causes of product issues will add to the bottom line by preventing ongoing returns and customer disappointment as well as provide priceless directional product feedback for the future. That’s value creation for the top line by developing product excellence. That’s a competitive advantage. That drives customer loyalty and retention. And that drives improved financial performance.

Net Margin Gains

Identifying the root causes of returns that negatively impact sales and profitability and then reacting quickly to adjust marketing, website merchandising & product detail, packaging, etc. in a way that properly aligns customer expectations. Lower returns = higher net sales and more product selling earlier in its lifecycle.

Improved EBITDA

Reducing returns also reduces the significant reverse logistics costs associated with processing and reinventorying that returned product. Costs are also reduced in the distorted level of customer service associated with addressing customers’ returns and refund inquiries. In the end, a $1M returns reduction delivers $0.5M-$1.0M+ back to the bottom line—money that can be invested back into your aggressive growth initiatives.

Enhanced Customer Experience

Identifying, addressing, and mitigating negative customer feedback to drive retention. Less customer disappointment drives a better experience.

Product Development Intelligence

Knowing what customers really want drives future product success. And knowing specifically where product and packaging issues play a role in customer dissatisfaction provides needed insight to optimize assortment and your supply chain.

Enhanced Sustainability

Returns Reduction reduces packaging, waste, and cuts back on carbon emissions.

Chief Returns Officer is a game-changing analytic tool that provides consistent monitoring of businesses, an elevated call to action, and collaboration and remediation across teams, business units, and partners.

A $1 M reduction in returns contributes $0.5 M - $1 M to EBITDA. And that is the bottom line.