{"id":26022,"date":"2017-11-15T21:42:30","date_gmt":"2017-11-16T02:42:30","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/stitch-fix-bringing-big-data-and-artificial-intelligence-to-fashion\/"},"modified":"2017-11-15T21:42:30","modified_gmt":"2017-11-16T02:42:30","slug":"stitch-fix-bringing-big-data-and-artificial-intelligence-to-fashion","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/stitch-fix-bringing-big-data-and-artificial-intelligence-to-fashion\/","title":{"rendered":"Stitch Fix: Bringing Big Data and Artificial Intelligence to Fashion"},"content":{"rendered":"

The Personalized, Convenient Platform<\/strong><\/p>\n

When Stitch Fix was founded in 2011, the concept revolutionized retail fashion. The online styling service provides a personalized shopping experience without leaving one\u2019s home. Their subscription model allows customers to choose a delivery frequency ranging from 2-3 weeks to three months. After customers fill out their own style profiles, a personal stylist hand picks pieces to match their tastes and budget and mails the items directly to them. They keep what they love and send the rest back in a prepaid envelope. Stitch Fix charges a $20 styling fee that acts a credit toward any of the items customers keep. [1] One big advantage to this model is that customers often try on and purchase items they might not have selected for themselves.<\/p>\n

Stitch Fix\u2019s business model was designed to address consumers\u2019 need for a more convenient, personalized shopping experience. But in the last few years, the landscape has changed, with many more online and offline competitors.<\/p>\n

Some of the Competition<\/strong><\/p>\n

Amazon Prime Wardrobe<\/em><\/p>\n

Prime Wardrobe is a new Beta service from Amazon which lets shoppers order clothing, shoes, and accessories at no upfront charge, take seven days to decide what they love, then only pay for what they keep. Prime Wardrobe is included for free with Prime memberships. [2]<\/p>\n

Le Tote<\/em><\/p>\n

Le Tote is a personal styling subscription service that allows customers to choose and rent five items at a time for $50 per month. Customers keep those five items as long as they want, then ship them back to receive new items. [3]<\/p>\n

Trunk Club<\/em><\/p>\n

Trunk Club can be used in three ways. The primary method is for a shopper to submit their preferences online so that a stylist can select apparel and ship them directly to the customer. A $25 styling fee is credited toward any purchases customers keep. The secondary method is via their clubhouses, where customers can go in for a fitting and have a stylist show them a selection of clothes that fit their style and budget. The last method is a custom tailoring service for men where specialists design and produce custom suits, button-downs, and outwear based on customer\u2019s measurements and specifications. [4]<\/p>\n

Traditional Retail Challenges<\/strong><\/p>\n

While Stitch Fix\u2019s online platform was very innovative, in many ways, Stitch Fix still faces similar challenges to traditional retail. For example, Stitch Fix\u2019s success is dependent upon on their ability to recognize trends, forecast customer tastes, and deliver merchandise that fulfills demand in a timely manner. In addition, lead times complicate forecasting, as fashion trends at the time of purchase from manufacturers might differ from the new apparel trends at the time of sale. [5]<\/p>\n

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

Figure 2: Source [6]<\/p>\n

Competitive Advantage<\/strong><\/p>\n

Stitch Fix is still leading the charge relative to its imitators. Personalization is their strongest weapon, especially as the company aims to go public and battle Amazon directly. Stitch Fix\u2019s strongest competitive advantage relative other competitors is their ability to combine online convenience with access to personal stylists, reducing shopping effort and simplifying decision making for customers.<\/p>\n

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

Figure 3: Source [7]<\/p>\n

Stitch Fix combines human expertise with Artificial Intelligence (AI) systems. Their big data-backed approach is another strategic advantage, especially when paired with machine-learning techniques to identify customer insights and foster innovation. Not only does this technology enable the company to increase the speed at which stylists can provide recommendations, but it also enables new fashion styles to be born entirely from data. The company\u2019s algorithm starts with existing styles that are then randomly modified over many \u201cgenerations\u201d to create whole new garments. [8]<\/p>\n

What\u2019s Next?<\/strong><\/p>\n

Stitch Fix should double down on their personalization focus and AI investments. Specifically, if they can continue to use big data to hone in on what each customer is looking for right from the first delivery, their customer acquisition and retention will increase, and their overall inventory should decrease due to reduced returns. Over the long term, these technology investments are essential to stay competitive and differentiated, and enable them to meet customer demand.<\/p>\n

Stitch Fix filed for IPO on October 19, 2017 \u2013 this raises several critical strategic questions, among them: will the additional monetary benefits of going public enable the company to take their business to the next level? Are big data and AI enough for the technology-based retail company to compete in the retail space? Is personalization enough for Stitch Fix to compete with Amazon?<\/p>\n

(Word Count: 766)<\/p>\n

 <\/p>\n

[1] Stitch Fix. https:\/\/support.stitchfix.com\/hc\/en-us\/articles\/204222994-What-is-Stitch-Fix-How-Does-it-Work-FAQ<\/a> accessed November 11, 2017<\/p>\n

[2] Amazon. https:\/\/www.amazon.com\/learn-more-prime-wardrobe\/b?ie=UTF8&node=16122413011<\/a> accessed November 11, 2017<\/p>\n

[3] Le Tote. https:\/\/www.letote.com\/<\/a> accessed November 11, 2017<\/p>\n

[4] Trunk Club. https:\/\/www.trunkclub.com\/boston<\/a> accessed November 12, 2017<\/p>\n

[5] SEC. Stitch Fix SEC Filing. October 19, 2017. https:\/\/www.sec.gov\/Archives\/edgar\/data\/1576942\/000119312517313629\/d400510ds1.htm<\/a> accessed November 13, 2017<\/p>\n

[6] Stitch Fix. Algorithms. http:\/\/multithreaded.stitchfix.com\/algorithms\/<\/a> accessed November 6, 2017<\/p>\n

[7] McKinsey & Company. Artificial Intelligence the Next Digital Frontier?, June 2017. https:\/\/www.mckinsey.com\/~\/media\/McKinsey\/Industries\/Advanced%20Electronics\/Our%20Insights\/How%20artificial%20intelligence%20can%20deliver%20real%20value%20to%20companies\/MGI-Artificial-Intelligence-Discussion-paper.ashx<\/a> accessed November 11, 2017<\/p>\n

[8] HBR. How One Clothing Company Blends AI and Human Expertise. November 21, 2016 https:\/\/hbr.org\/2016\/11\/how-one-clothing-company-blends-ai-and-human-expertise<\/a> accessed November 14, 2017<\/p>\n","protected":false},"excerpt":{"rendered":"

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