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Stitch Fix (SFIX), the online personal styling company, wants to give customers an online shopping experience that more closely mimics picking clothes in a department store.
“So much of what e-commerce has been is search and scroll and it’s inconvenient,” Elizabeth Spaulding, Stitch Fix’s CEO, said at Yahoo Finance’s All Markets Summit this week. “Think about going to a website where 95% of it is irrelevant to you. And you’re doing all the work to search for what’s relevant.”
Stitch Fix, which reached $2 billion in annual net revenue in 2021, aims to transform the e-commerce and online shopping experience by moving from search and filter to browse and discover through its “freestyle” offering, which it expanded in September. In the latest quarter, Stitch Fix had close to 4.2 million active clients, an 18% increase year over year, according to the company.
“What freestyle does, is it’s your own personalized store. You can open up our app or mobile web experience and we are dynamically generating a home feed and a shopping feed of looks just for you,” said Spaulding.
Shoppers see curated clothes based on items they’ve shown interest in or items they may have purchased in the past.
'Rich understanding of consumer preference'
“It’s dynamic. So we’re refreshing [freestyle options] regularly throughout the day based on the inventory that’s available, new brands, and offerings that we’ve added to our catalogue,” Spaulding said.
In 2019, the U.S. apparel industry was valued at about $368 billion, but retailers took a hit during the pandemic. McKinsey Global Fashion Index analysis projected a roughly 90% drop in economic profit in 2020 for fashion companies, following a 4% increase in 2019.
Given that the pandemic is ongoing and continues to be a threat to in-store shopping, many executives in the fashion industry view e-commerce as their biggest opportunity by far.
“What [freestyle] does for us is it opens up the full addressable market for Stitch Fix. A close to half a trillion dollars...of fashion in a category that is moving away from stores and moving online,” said Spaulding.
Stitch Fix’s algorithms and data science are the secret sauce behind its freestyle shopping experience, which leverages consumer feedback on a real-time basis.
“Many of our clients play around with a widget in our app called Style Shuffle where you essentially thumb up and thumb down items and outfits,” said Spaulding. “A million clients play that every month. We have over 9 billion data points. That is generating just such a rich understanding of consumer preference.”