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<\/a><\/p>\nQ1: <\/strong>Machine learning is critical to Stitch Fix\u2019s management of process improvement and product development, as \u201cwe use data science throughout our business, including to style our clients, predict purchase behavior, forecast demand, optimize inventory and design new apparel.\u201d[1]<\/a> Stitch Fix customers directly provide many data points for the company, including structured information such as size and brand preferences, and unstructured information such as social media and Pinterest boards.[2]<\/a> \u00a0\u201cThis large and growing data set provides the foundation for proprietary algorithms that we use throughout our business\u2026and as our data set grows, our algorithms become more powerful.\u201d[3]<\/a> This information increases chances for Stitch Fix to select clothing the customer will keep\u2014Stitch Fix wants success on the first shipment (\u201cFix\u201d) to facilitate customer satisfaction and lower return rates. When products are returned, Stitch Fix uses machine learning to better understand clients\u2019 sizes and styles for future shipments. Based on how many Fixes a customer orders, Stitch Fix can also predict clients\u2019 purchasing behavior and buy inventory accordingly, saving on inventory costs.[4]<\/a> Stitch Fix also uses machine learning to create new products, called \u201chybrid designs.\u201d[5]<\/a> Stitch Fix sorts through top attributes of best-selling products, then combines these top attributes into new products for different fixes. They also create new products based on customer feedback. For example, women were complaining that camisoles were too low cut, so Stitch Fix created their own adjustable camisole.[6]<\/a><\/p>\n <\/p>\n Q2: <\/strong>In both the short and medium term, Stitch Fix management will continue to capitalize on machine learning to launch new products and improve processes. Since Stitch Fix launched in 2011, they have steadily added new categories of business. In 2015 they launched maternity and petites, in 2016 shoes and men\u2019s, in 2017 plus sizes and premium brands, and in 2018 kids.[7]<\/a> CNBC stated that \u201cThe rapid additions\u2026should drive sustained 20% revenue growth\u2026the kids opportunity could drive $0.12+ in EPS over the next three years.\u201d[8]<\/a> These continued product launches have shown the flexibility and sustainability of Stitch Fix\u2019s machine learning platform. Stitch Fix also has exclusive brands, which they have been launching when they add new categories of business. When Stitch Fix launched kids, they introduced an exclusive brand Rumi + Ryder.[9]<\/a> In the future, Stitch Fix will continue to add more exclusive brands that they develop based on machine learnings from customer feedback.<\/p>\n <\/p>\n Q3:<\/strong> There are many additional steps management could take to continue building on machine learning. One idea is to increase the number of items per fix for adults (currently 5) relative to \u00a0Kids (currently 8-12) based on algorithm recommendations. In the medium term, the CEO stated that Stitch Fix plans \u201cto continue growing our addressable market through expansion into new categories, product types and geographies.\u201d[10]<\/a> Currently, Stitch Fix is only offered in the U.S., but they announced this October that they will be entering the UK market.[11]<\/a> Their ability to integrate additional data into their algorithms will allow them to effectively scale globally. Stitch Fix can also start utilizing machine learning to prioritize rush orders. Currently, it takes around a week to receive a Fix. They can build an algorithm to account for rush orders and prioritize these Fixes in the styling funnel at premium prices. A Stitch Fix order is processed by 5-10 styling algorithms before it reaches a human stylist,[12]<\/a> so one of these algorithms could add in a prioritization funnel.<\/p>\n <\/p>\n Q4:<\/strong> An important question related to machine learning in the retail space is as follows: how do you see Stitch Fix competing with Amazon (another digitally native e-commerce company also utilizing machine learning and new technology, e.g., the Echo Look)? (800 words)<\/p>\n <\/p>\n <\/p>\n <\/p>\n [1]<\/a> STITCH FIX, INC. FORM 10-K. (2018). Retrieved from https:\/\/investors.stitchfix.com\/static-files\/8187ffaf-fd52-493f-9f90-79d8d768ea40<\/p>\n [2]<\/a> Wilson, H. J., Daugherty, P., & Shukla, P. (2016). How One Clothing Company Blends AI and Human Expertise.\u00a0性视界 Business Review<\/em>,\u00a022<\/em>, 1\u20138.<\/p>\n [3]<\/a> STITCH FIX, INC. FORM 10-K. (2018). Retrieved from https:\/\/investors.stitchfix.com\/static-files\/8187ffaf-fd52-493f-9f90-79d8d768ea40<\/p>\n [4]<\/a> Sonsev, V. (2018). Can Algorithms Replace Humans At Stitch Fix? Retrieved November 4, 2018, from https:\/\/www.forbes.com\/sites\/veronikasonsev\/2018\/03\/15\/can-algorithms-replace-humans-at-stitch-fix\/#6b8c276a4041<\/p>\n [5]<\/a> Marr, B. (2018). Stitch Fix: The Amazing Use Case Of Using Artificial Intelligence In Fashion Retail. Retrieved November 4, 2018, from https:\/\/www.forbes.com\/sites\/bernardmarr\/2018\/05\/25\/stitch-fix-the-amazing-use-case-of-using-artificial-intelligence-in-fashion-retail\/#2cde2dd63292<\/p>\n [6]<\/a> Ibid.<\/em><\/p>\n [7]<\/a> Stitch Fix Company Fact Sheet About Stitch Fix<\/em>. (n.d.). Retrieved from https:\/\/newsroom.stitchfix.com\/wp-content\/uploads\/2016\/09\/StitchFix_FactSheet-8.pdf<\/p>\n [8]<\/a> Pineda, M. (2018). Stitch Fix jumps 9% after launching kids clothing service. Retrieved November 4, 2018, from https:\/\/www.cnbc.com\/2018\/07\/10\/stitch-fix-surges-10percent-after-launching-kids-clothing-service-bullish-a.html<\/p>\n [9]<\/a> Stitch Fix Launches Stitch Fix Kids – Stitch Fix Newsroom. (n.d.). Retrieved November 5, 2018, from https:\/\/newsroom.stitchfix.com\/press-releases\/stitch-fix-launches-stitch-fix-kids\/<\/p>\n [10]<\/a> Bowman, J. (2018). Here\u2019s Why the Best Is Yet to Come for Stitch Fix. Retrieved November 4, 2018, from https:\/\/www.fool.com\/investing\/2018\/06\/11\/heres-why-the-best-is-yet-to-come-for-stitch-fix.aspx<\/p>\n