{"id":10443,"date":"2020-02-10T20:25:24","date_gmt":"2020-02-11T01:25:24","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/stitch-fix-fashions-most-innovative-retail-company\/"},"modified":"2020-02-10T20:25:24","modified_gmt":"2020-02-11T01:25:24","slug":"stitch-fix-fashions-most-innovative-retail-company","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/stitch-fix-fashions-most-innovative-retail-company\/","title":{"rendered":"Stitch Fix \u2013 Fashion\u2019s Most Innovative Retail Company"},"content":{"rendered":"

Stitch Fix, an e-commerce retailer started in 2011 by HBS grad Katrina Lake, was recently named \u201cWorld\u2019s Most Innovative Retailer in 2019\u201d by Fast Company<\/em>. The company, now valued at over $2 billion and with an active user base of 3 million customers, has leveraged their data-driven capabilities to become a digital winner in the apparel space.<\/p>\n

A Lagging Retail Industry<\/h4>\n

What makes Stitch Fix a sure digital winner in this space? It\u2019s important to consider where the apparel industry was before Stitch Fix joined the scene. By 2011 more than a quarter of clothes were sold online, with department stores increasingly on the decline. Customers were valuing convenience and ease over the time-consuming experience of shopping in-stores. But even within e-commerce, customers still had to go through the process of navigating multiple websites, perusing excessive quantities of inventory, trying on clothes at home and returning any purchases that didn\u2019t fit. While improvements had been made over department store shopping, e.g. customers could now try on clothes from the comfort of their homes, the discovery process and time-consuming returns process left a lot to be desired. When we look at the rise of tech companies aimed at increasing consumer convenience (Uber, AirBnB, InstaCart, BlueApron, TurboTax, etc.) we can see how the retail industry was lagging in these types of innovations.<\/p>\n

 <\/p>\n

\"\"<\/a><\/p>\n

Stitch Fix Process (1)<\/p>\n

Leveraging Data<\/h4>\n

Stitch Fix addresses several of the problems they saw in online shopping. First, they solve the \u201cdiscovery problem\u201d \u2013 that is, customers often found themselves overwhelmed with optionality, confronting endless pages of inventory online. The \u201canalysis paralysis\u201d phenomenon is addressed with personalized offerings, based not just on the customer\u2019s data, but on all Stitch Fix users\u2019 data through an app feature described as \u201cTinder for clothes\u201d allowing anyone to rate Stitch Fix\u2019s offerings. With this feedback, Stitch Fix has gathered more than a billion ratings that work to train the company\u2019s algorithm to understand a client\u2019s style.<\/p>\n

How do you mail customers clothes they\u2019ll love, and that fit perfectly, without the client ever getting measured or viewing the inventory?<\/em><\/p><\/blockquote>\n

Algorithm Solutions<\/h4>\n

Stitch Fix has found a way to offer personal styling at scale through data innovation. \u201cAlgorithms drive Stitch Fix\u2019s every move,\u201d says Fast Company\u2019s <\/em>Laura Smiley. Algorithms do everything from detailed monitoring of inventory and repurchasing needs, to calculating the most efficient path for a warehouse worker to take, to matching precise measurements of clothing options with and extensive amount of client preferences. The data collected also fuels friendly relationships with their suppliers. Stitch Fix partners with over 1,000 brands, both indie and established, and is able to provide them unprecedented amounts of data on their products. Not only is Stitch Fix offering a relevant channel for brands to sell to clients (as opposed to traditional department stores or unsavory contracts with Amazon), but they are getting specific feedback on how they can improve their offerings that they otherwise wouldn\u2019t have access to.<\/p>\n

Embracing Data Science<\/h4>\n

What allowed Stitch Fix to reach its level of success has been its willingness to think of itself as a tech company. This is why it hired over 100 data scientists, why it focuses so much energy on gathering as much data as possible, why it thinks of itself as an \u201cAI machine combined with human curation\u201d and why it continues to push features that further \u201cgamify\u201d the app and increase stickiness among customers. Customers love the convenience and brands love the demand certainty and customer feedback that come from this data science approach.<\/p>\n

Looking Forward<\/h4>\n

Since Stitch Fix has come to market, we\u2019ve seen a growing number of imitators. Many revolve around the subscription model (DAILYLOOK, Dia & Co, Just Fab, Rent the Runway Unlimited, Box of Style, Fabletics, Trunk Club, etc.) and more and more retailers are embracing technology innovations themselves (Nike, adidas, Everlane, Nordstrom, Bonobos, etc.). Retailers are recognizing the need to own their customer\u2019s data and sales channel themselves \u2013 selling through previous e-commerce options like Amazon and Walmart have become less appealing, especially as retailers worry about brand dilution and design IP.<\/p>\n

While brand dilution is obviously not a concern for Stitch Fix’s partner retailers today, what Stitch Fix chooses to do with its mountains of customer data may become cause for concern. Stitch Fix recently began its own in-house design and production capabilities. This makes sense as Stitch Fix becomes more attuned to what their customers want, and an in-house brand allows them to iterate and refine inventory more quickly. While the company states it has no plans to become fully vertically integrated, it\u2019s worth considering how the retailers they partner will view and respond to this move.<\/p>\n

 <\/p>\n

(1) https:\/\/www.fastcompany.com\/90298900\/stitch-fix-most-innovative-companies-2019<\/a><\/p>\n

(2) https:\/\/risnews.com\/stitch-fix-named-worlds-most-innovative-retailer-2019<\/a><\/p>\n

(3) https:\/\/www.businessinsider.com\/stitch-fix-personal-styling-overview<\/a><\/p>\n

(4) https:\/\/www.elle.com\/fashion\/a15895336\/katrina-lake-stitch-fix-ceo-interview\/<\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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