How Stitch Fix is Using Artificial Intelligence to Disrupt The Way We Shop

pexels-photo-450212.jpeg

Will spending time searching for the right jacket eventually become a thing of the past? Stitch Fix, an online personal style service, seems to think so.  The company uses artificial intelligence to provide a level of personalization that is not provided by most retailers.  While there is a lot of discussion about personalization, how many companies are actually delivering on it?  Only 22% of customers are satisfied with the amount of personalization they are receiving. Stitch Fix’s approach of combining artificial intelligence with a human touch is a great example of how shopping is evolving.

To get started with Stitch Fix customers need to complete a detailed online questionnaire.  The questionnaire covers a wide range of questions to understand the customer’s style, size, price preferences, how often they need new clothing for various occasions (i.e. work, dates, events) etc. Some atypical questions include what body parts do customers like to flaunt or cover up? Customers then pay a $20 styling fee (no subscription is required).  Then five clothing items are sent to the customer and if they like them they can keep them, if they do not, they can return them for free. Shipping either way is also free.

The service takes away some of the pain points associated with shopping. One of the reasons customers spend so much time shopping is because it can take a long time to find the right style, in the right colour, with the right fit.  While ecommerce makes it easier to shop the shopping experience is not always the most efficient.  Try finding a cute summer dress on the website of a leading department store. Thousands and thousands of results are surfaced.  Then it can take hours to find the right colour and the right style only to find at times that a customer’s size is not in-stock.  What is missing from that approach is more curated content. What the customer really wants is a set of choices that meets their specific wants and needs.  

Stitch Fix is is meeting those customer needs by leveraging artificial intelligence.  It employs 80 data scientists with PhDs in areas such as math, neuroscience, statistics, and astrophysics.  Using over 85 meaningful data points provided by customers, merchandising algorithms based on artificial intelligence are built and used to make personalized clothing recommendations for each customer.  Then, enter the stylists who add an essential human touch. They can override the recommendations made by the algorithms.  If a customer is shopping for a new job opportunity the stylist adds their own expertise to ensure the right look is selected. Stitch Fix employs 3,500 stylists for this type of work.

Stitch Fix has found a way to provide personalization to the masses and customers are responding. Stitch Fix, founded in 2011, made nearly $1B in 2017, has been profitable since 2014 and has over 2 million active customers with a repeat rate of 86%.

Check in weekly for articles on digital transformation and customer experience innovation to learn what strategies businesses are using to accelerate their sales growth.

Sources

https://www.businesswire.com/news/home/20180220006084/en/Amazon-Sephora-Nordstrom-peer-voted-BEST-IN-CLASS-RETAIL

https://hbr.org/2018/05/stitch-fixs-ceo-on-selling-personal-style-to-the-mass-market

https://retail.emarketer.com/article/stitch-fix-ipo-its-about-data-not-fashion/59ea81cdebd4000aa48d8e95

https://www.fastcodesign.com/90128248/how-stitch-fix-is-using-algorithmic-design-to-become-the-netflix-of-fashion

https://finance.yahoo.com/news/stitch-fixs-unique-business-model-163313585.html

http://www.businessinsider.com/sc/stitch-fix-personalized-shopping-2017-3

 

Tricia McKinnon