Analytical Guide: How does Stitch Fix Work?

Stitch Fix is an online clothing shop developed to offer personal styling services at an affordable price. It was specifically created for women who need to wear nicer clothes for different places like events, work etc. but who doesn’t want to expense hours and hours combing through clothing stores to put together outfits.

Stitch Fix’s mission is to make shopping fun, simple, and empowering.

Katrina Lake was fond of fashion. After graduating from college, she wanted to be a part of a company that was involved in innovating clothing through technology. Not finding any, she chooses to join a venture capital firm, where she learned a lot about the business world. She also realized that if she wished to see a certain type of company, she could just start one herself.

She decided to go to B-school to learn about entrepreneurship, with the note in mind to launch her own venture by the time she graduated. She eventually started to assist customers with clothing purchases. Her sister was a buyer who used her knowledge to find suitable apparel. Lake felt that everyone should be able to have this chance.

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She started testing out her concept in her second year. With a $6,000 credit card, she purchased clothes from boutiques, then brought them to friends and relatives’ houses. She then had them try on the clothes and provide her views through surveys on fit, texture, colour, and styles. By doing this, she gathered enough information to provide a business case for a service that would help style consumers.

She next tried to obtain funding, meeting with potential venture capitalists. She landed funding of $750,000 from Steve Anderson (the very first investor of Instagram). Lake made use of the funds to launch her startup, which she called Stitch Fix, in 2011. She started a website and bought clothes at wholesale.

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Lake’s service worked by getting online feedback from customers about their styling preferences, body types, and budgets. Customers pay a $20 fee for styling, received the clothes, purchased the outfits they liked and returned the rest.

When Lake graduated she tried to obtain additional funding, but she faced difficulties. Anderson stepped up again into this, keeping her afloat. By 2016, Stitch Fix had grown to over 4,000 employees and had shipped out millions of orders.

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How does Stitch Fix Work?

How does Stitch Fix Work – The answer to this question lies in the following points.

Fill Out the Style Profile

First, the user will be required to finish a Style Profile. This data will help the Stylist understand the sizes and styles the user is looking for, as well as his/her ideal price range. Completing a profile takes about 10-15 minutes.

Pick the Date Like to Receive Your Shipment

Choose the preferred delivery date from the calendar. At the time the Stylist selects the items, he/she will be charged a $20 styling fee. That $20 will be applied as a credit toward anything he/she keep from his/her shipment.

Try Everything on From the Comfort of Your Own Place

Stitch Fix encourages the user to try on everything in the box, especially since he/she never know what will look good or what he/she might like. Pair items from his/her shipment with clothing and accessories the user already own to discover what looks good together before the user decide to buy them. Learn more about the advantages of working with a personal stylist.

Buy What the User Like and Return the Rest

This is one of the simplest ways that answer the question: How does Stitch Fix Work?

Take up to three days to decide what the user wants to buy and what to send back. He/she will only be charged for the items the user choose to keep when he/she check out online or through the free Stitch Fix app.

Check out by signing into the user’s account and selecting the items he/she is keeping, returning (if available), or exchanging. Stitch Fix then charges the users for any items he/she has decided to keep. The $20 styling fee will automatically be applied as credit toward any items the user purchases. If the user buys everything, he/she receives a 25% discount off the entire box!

Easily return the items the user don’t want in the prepaid envelope and drop it into any USPS mailbox. Enjoy free shipping both ways as an advantage of using the service.

Tell us what you think

Remember to give us feedback on the products you received. Feedback from the customers tells the stylist of the Stitch Fix what are the likes and dislikes of a particular customer. Blog section has been given for customers to get the idea about how to convey the message to the stylist.

Recurring shipment is delivered to a customer if the customer chooses to get that on any scheduled date. The customer can stop regularly scheduled shipments at any time.

It is not required of membership fee or a monthly subscription.

So, this is the way How does Stitch Fix Work and now let’s move on to the value proposition of the Stitch Fix.

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Value Proposition of Stitch Fix

There are four value proposition of Stitch Fix: customization, convenience, pricing, and brand/status.

Customization

The company facilitates customization. Clients utilize its service by filling out an online survey specifying their style, size, and price preferences. A personal stylist then analyzes this data, as well as details from other references. These references include clients’ social media profiles (e.g., Instagram) and feedback on previous fixes if it is a retained client. These inputs are there to make educated guesses about the type of apparel clients would prefer – for example, stylists can pretend that a customer has a 40% chance of keeping a particular type of cotton. The stylist then chooses five pieces of clothing (“fixes”) that presents the best fit. Clients then schedule a day to get the products. If they choose to go for a subscription, they can also choose the amount of time between shipments.

The company provides convenience by making its service easy to use. Clients can buy the clothing they like while returning the rest. Each piece also comes with styling tips.

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Price

There is a price value proposition. The stylist service fee is only $20. The average price point for its apparel is $55 per product; that said, there is a wide range of prices. If clients choose to buy all five selected pieces, they get a 25% discount on their entire purchase. If customers do not want a product, they can use an included prepaid envelope to return it for no charge.

The company has launched a strong brand due to its accomplishment. It has shipped millions of packages to clients since it has been begun. It offers a wide range of products, including sweaters, pants, shorts, skirts, dresses, shirts, jewellery, shoes, scarves, outerwear, and bags. These products are sourced from over 250 women’s wear brands and over 30 men’s wear brands, both established and up-and-coming. Specific women’s apparel names include Gorjana, Kut From The Kloth, Joie, and Citizens for Humanity. Specific men’s apparel names are Original Penguin, Ben Sherman, Scotch & Soda, Mavi, 7 For All Mankind, and Converse. Lastly, Stitch Fix has achieved a number of honours. One of these is by Tech in Motion with a Timmy Award for being one of the large firms in San Francisco with the “Best Technology Work Culture“(2015).

Channels

Website of Stitch Fix can be considered as the main channel of it. The other you can consider is, its social media pages for promotions and last but not the least, participation in trade shows and conferences.

Customer Relationships

Stitch Fix’s relationship is basically of a dedicated personal assistance nature. It assigns customers an individual personal stylist who uses provided details to choose clothing items. It also offers e-mail support. There is also a self-service feature for clients. The company’s website offers a size chart, a style guide, and solutions to frequently asked questions.

Key Activities

Stitch Fix’s business model involves offering personalized styling services to its clients.

Key Partners

Stitch Fix runs the Influencer program, an affiliate program through which it invites third parties to endorse the service through their stages (website, mobile apps, etc.). These parties receive a cash payout for customers that use a link on the platform to visit the company’s website and place an order. Program benefits include the following:

• Invites to private events hosted just for influencers
• Chances for giveaways, cross-promotions, and other partnerships
• Admittance to insider news through the company‘s influencer newsletter and Facebook group
• Best practice guides and content toolkits to guide with generating more referrals
• Occasional gifts and other surprises as tokens of approval

Key Resources

Stitch Fix’s main assets are its human assets – namely the thousands of stylists who select products for clients based on their first choices. It sustains important physical assets in the form of five distribution centres and four office spaces. Lastly, as a startup it has depended heavily on funding from other parties, raising $46.8 million from four investors as of June 2014.

Cost Structure

Stitch Fix has a value-driven arrangement, aiming to offer a premium proposal through significant personal service. Its biggest cost driver is likely to cost of services, an unpredictable cost. Some of the major drivers are in the areas of customer support/operations and sales/marketing, both fixed costs.

Revenue Streams

Stitch Fix has 2 revenue streams: Fee of a stylist service and that is, $20 for one-time order and the other is a subscription fee for customers who want to receive the orders on a chronic basis.

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