Subscription Box Service Stitch Fix Fills a Void in Traditional Retail - eMarketer

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Subscription Box Service Stitch Fix Fills a Void in Traditional Retail

April 6, 2016


Julie Bornstein
COO
Stitch Fix

Subscription box services promote themselves as offering the personalization and convenience rarely found in a retail setting. Users of online personal shopping and subscription service Stitch Fix are sent a box of five apparel, accessory or footwear items selected for them by their stylist. eMarketer’s Tricia Carr spoke with Julie Bornstein, COO of Stitch Fix, about what the company has learned about its customers and why she thinks these types of services are disrupting traditional retail.

eMarketer: What draws consumers to personalized services like Stitch Fix?

Julie Bornstein: There is a trend in general to outsource services. It’s not just subscriptions—you see it in all kinds of businesses. It’s the idea of relying on someone else who knows what you want, can pick things you wouldn’t have thought to try but make you feel great, and allows you to spend time doing the things you want to spend time on.

eMarketer: What’s your most effective marketing tactic to acquire new customers?

Bornstein: The biggest source of growth for this business has been customers referring their friends. It’s about the strength of the benefits and experience that our clients have with the service, plus some technical facilitation that makes sharing easy. Our business has grown almost entirely organically, which is unusual in the retail business and for a new brand.

“The biggest source of growth for this business has been customers referring their friends.”

eMarketer: What type of marketing efforts make your current customers stick?

Bornstein: We recently relaunched our blog, which is about practical styling tips for everyday dressing. The blog serves as an engagement platform for current clients to get ideas and see us providing help and service between their Fixes.

We also relaunched the Ask a Stylist feature to engage with our current clients. We’ve trained more stylists to support an online base of consumers asking questions, and it has taken off. Consumers can ask any question—no matter if it relates to body shape or size, how to pair items, or what to wear for certain occasions—and we respond within one day. The community can see the question and answer, too.

eMarketer: What have you learned about your customers since Stitch Fix was founded in 2011?

Bornstein: Over a third of our customers now spend more than half of their apparel wallet share with Stitch Fix. They are replacing their former shopping habits with our service. That’s the most fascinating thing, because it’s a new service and behavior. In a world with so many options, it’s powerful to have that wallet share from a consumer.

eMarketer: How are services like Stitch Fix disrupting traditional retail?

Bornstein: Technology has sped up the pace of people’s lives. The more options and entrepreneurial ideas out there, the more overwhelmed and time-starved everybody is. The idea that someone can understand your needs and not only save you time but also make you feel great is a powerful thing.

It’s also a new way of thinking about shopping. This type of service has existed on the higher end for wealthy women who have personal stylists. But it adds value to offer this opportunity to people of broader economic means and, even if you have high economic means, in a time-efficient way.

eMarketer: Is there a void in traditional retail that services like Stitch Fix fill?

Bornstein: Traditional retail is time-consuming. Even if you love to shop, it’s inefficient if you’re looking for specific items or have a need for a special occasion. However, physical shopping won’t go away as a pastime. For those who like to do it—I am certainly one of them—there is a place for it.

“Over a third of our customers now spend more than half of their apparel wallet share with Stitch Fix. They are replacing their former shopping habits with our service.”

Shopping requires time and expertise that most people don’t have. We all get into ruts and end up buying the same things for ourselves. But Stitch Fix has the ability to fill a specific need that you have or surprise and delight you.

eMarketer: How does Stitch Fix offer personalization at such a large scale?

Bornstein: We make our data work in a way that’s felt from a consumer standpoint. We have a team of over 60 data scientists, and they help us figure out how to use our data on all dimensions. We have five years of data under our belt, which is a data scientist’s dream.

The platform we built that the stylists work with is powered by algorithms built by the data science team. It allows the human touch of the stylist to come in over the top and customize every Fix. We use a combination of big data and what we call “small data” at the consumer level to handpick every product for every client.

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