Stitch Fix’s value co-creation


In the past it was easy to make a choice due to the lack of options among products. However, this has changed drastically. According to the NY times consumers see around 3,000 to 20,000 marketing messages a day. Moreover, we are bombarded with choices. Choice overload, which happens offline as well as online, exists for all kinds of products and services that we need.

Choice overload also exists when we shop for new clothes. Offline overload could exist when we go into a store and are presented with too many choices. Online overload happens when we browse a web store and experience choice overload. Source overload happens when too many websites and or platforms exist that makes it difficult to choose where to shop.

In 2011 Katrina Lake launched Stitch Fix. Stitch Fix is a fashion retailer that combines expert styling and technology to deliver a shopping experience that is personalized for the customer. It does so by having you first fill out a survey so that your personal stylist knows your preferences. Then it will send you five clothing items or accessories from various brands tailored unique to your taste. You can try all the items at home. You can buy what you want and then return the rest. Shipping and returning items are for free. Hence, Stitch Fix partially solves the choice overload that customers experience when shopping, by filtering the endless amount of choices into five choices.

Online recommendation systems used by companies such as Amazon.com learn from your preferences by tracking your searches and clicks in order to provide you with products that you might want. However, depending whether the algorithm and machine learning works well, this could lead to undesirable outcomes. For example, you could end up getting unwanted recommendations after you buy a gift for a friend or your mother who have different tastes and preferences in products than you have.

What makes Stitch Fix different than other online shopping experiences is that there is a human personal stylist involved in the item recommendation process. Your personal stylist handpicks five items just for you, based on your set preferences. Stich fix charges $20 styling fee for each item that you buy. But if you decide to buy all five items, you will get a 25% reduction on the total price of the shipment. The company gathers data and your feedback on the items that you decide to buy and the items that you decide to return to update your preferences. This will be then used to make better recommendations in the future. Hence, as stated by Stitch Fix, the more you make use of the service the better your personal recommendations will be and greater your satisfaction.

The success of Stich Fix proves that there is indeed a need for personalized recommendations and active customer participation. Furthermore, it shows that customers are willing to pay a premium on top of store prices for services that makes things convenient and or saves time.

References:

https://www.stitchfix.com

http://mashable.com/2014/06/16/unique-business-models/

http://www.bizjournals.com/dallas/news/2015/04/03/stitch-fix-to-open-u-s-distribution-hub-in-dallas.html

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