Fashion + Science = Stitch Fix

How does the future of clothing retail look like? Eight years ago, Katrina Lake looked at some key trends that would shape the future of online clothing retail.

First, connectivity and e-commerce, people are buying in 1 click and having the goods delivered at the comfort of their homes, but the fit is always a problem when it comes to fashion.

Second, the discovery process is overwhelming for buyers when there are thousands of different options.

Third, data science, tons of data are considered in the decision process, but it’s not captured anywhere.

With these in mind, Stitch Fix developed its business models with data scientists at its core capturing users and SKUs data to bring a unique experience to their customers. Today the personalized online styling company has more than 3 million active users that shop apparel, shoes, and accessories across different categories, brands, product types, and price points. Let’s take a look at the best practices and opportunities for Stitch Fix:

1. Digital strategy: Stitch Fix has a clear vision of where the industry and online shopping is going, where people are looking for personalized recommendations rather than “search and filter” options. After years of collecting data points and learning how to incorporate data + people in their business, they are ahead of any other company. Their model is a platform as an operating system, they own their assets (software, algorithms, inventory, stylist) and the service delivery occurs by the use of the service platform. This represents a challenge to scale their business, there is potential to evolve to a B2B platform for existing retailers could be an interesting option, and some of the new startups like LookyLu are already doing it.

2. Business model: The business was developed around a clear raw need of the customer. Their current fee-based model has been very profitable, but the frequency of orders and engagement has been a challenge, so a subscription model will be soon offered as well. Their current active user base continues growing by incorporating new categories such as kids, men’s and plus sizes.

3. Enablers: data and analytics that have been collected since day 1 and are seamlessly incorporated in their operation; talent and culture, where they develop full-stack data scientists that are empowered to execute with minimum dependencies and bureaucracies. And operating models and partnerships that have been improved and developed with time, their inventory management is crucial for their success as business and data have been key to improve it.

We will continue to see different efforts to close the gap between e-commerce and offline shopping, especially for products that need to be tried on such as clothing and beauty products. The future landscape will evolve, as big companies such as Amazon are already starting the journey for styling with the acquisition of Body Labs and launch of echo-look last year, but Stitch Fix definitely leads the learning curve of incorporating AI models into their current operations.