This Women's Shopping Service Brings the Stylist to Your Door
If Stitch Fix has its way, no woman will have to suffer the indignity of unflattering dressing-room lighting again.
The San Francisco-based e-tailer, founded in 2011 by Katrina Lake, ships curated clothing and accessories directly to its customers. The selections are based on a 10-minute style profile that asks practical questions about height, weight and body shape, but also drills down for style preferences and whether a customer wishes to flaunt her cleavage, arms, legs or midriff, or keep them covered. Users schedule how often they receive new deliveries.
The heart of the organization is its stylists. They draw from more than 200 brands—six of them exclusive, representing more than 30 percent of the company’s merchandise—to personalize each five-item Stitch Fix box. Users pay a $20 styling fee per order, which goes toward the items they keep; they have three days to return the rest. If they purchase all five items, they receive a 25 percent discount.
But what Stitch Fix is most known for is its uncanny ability to ship the perfect pair of jeans. “The experience of shopping for denim is so broken, and our buyers have put a lot into figuring out which are the best brands,” Lake says, pointing out that most of the company’s customer feedback concerns jeans. “What a miracle it feels like when someone can send you, sight unseen, a pair that fits you great.”
Lake worked as a consultant for clients such as Kohl’s and Applebee’s and managed the blogger platform at Polyvore before entering Harvard Business School with the goal of finessing her business model and securing funding. She accomplished both. Baseline Ventures’ Steve Anderson provided $750,000 in seed money; two 2013 infusions followed: $4.75 million in February from Baseline and Lightspeed Venture Partners, and $12 million in October from Benchmark Capital. Stitch Fix would not confirm reports of a $30 million Series C round in mid-2014 that would value the company at $300 million.
In addition to her consulting work, Lake drew from her experience working at Banana Republic in high school. “Working with people in a fitting room gives you so much more of a sense that it’s not just selling clothes. Some people are making decisions based on form and function, but for others, it is about ‘feeling awesome in this blouse,’” she explains. “When I applied to business school, I didn’t have the exact idea, but I had this notion of how you could integrate retail, technology and data to be able to deliver a better retail experience.”
The average Stitch Fix user is a thirtysomething professional, but Lake has also heard from cancer patients who don’t have the energy to shop and women who need clothes in a pinch. “We had a woman who was able to get a delivery in time to get a black dress for a funeral,” she says. “We hear an immense number of touching stories.”
Within 90 days of receiving their first shipment, 70 percent of clients order a second box, Lake says. The average cost per item is $55, a $10 drop since the company’s launch. “As we’ve gotten bigger and our market is growing, we’ve seen that our customer is a little more mass-market, so we’ve been able to bring down the price a little bit.”
However, Lake made the decision not to be an off-price retailer. “There was a point where there was a perception that any successful retailer had to be in a race to the bottom, offering everything cheaper and faster,” she says. “There’s a whole class of products where [that] is the right value proposition, but for apparel we want to help people find products that fit them best for their price point and style.”
Lake would not comment on revenue, but staffing increases indicate rapid growth. Since 2013, the company has gone from about 200 to more than 1,500 full- and part-time staffers, spread across its main San Francisco office, newly opened satellite offices in Austin and Pittsburgh and distribution centers in South San Francisco and Indianapolis. The team boasts high-profile retail veterans, including COO Mike Smith, formerly of Walmart.com, and board members who have held key posts at Sephora, Gap and Banana Republic.
Although Lake hopes to eventually expand, there are no near-term plans to diversify into plus sizes, men’s or children’s clothing.
“Over the long term, we’re thinking about how we can make the service more broadly acceptable to other segments,” she says. “Shorter term, we’re focused on [improving] what we’re doing today.”