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#NRF2020: Stitch Fix denies that ‘direct buy’ launch is to keep shareholders happy

In a move away from the company’s DNA, the personalised online styling service will now allow consumers to engage beyond the traditional format. “Direct buy allows us to tell our story in the most effective way. [Our customers] will now get to see things they may not have known that we offer." 

Since launching ‘direct buy’, Stitch Fix Inc. shares have rallied, jumping more than 50% between October and December 2019, with a better than expected profit forecast from the company. A Bloomberg article wrote: “Wall Street was particularly optimistic about the company’s direct buy programme, which is expected to add a tailwind to revenue growth. 

Telsey Advisory Group found ‘a lot to like’ in the quarter, but singled out direct buy, which has shown ‘early signs of success in supporting revenue per customer growth.’”

Smith credits the company’s growth and success to improved data, better client engagement and re-engagement activities. “In the early days our internal styling cockpit didn’t have nearly as much data and the user interface needed work. Our stylists are now using technology better to curate more data and increase productivity.

You have to deliver outstanding experience, you have to earn the trust of your clients and you need to make the marginsMike Smith, Ocado Group

“Our inventory matching algorithm has been super successful. We take into account thousands of clients in the queue and optimise around a much larger group of clients and inventory. It’s a hyper-curated, hyper-personalised list,” Smith said. 

The more data Stitch Fix has, the more it can understand its clients’ shape, fit, style and needs. “Customer expectations are constantly getting higher and we have to meet that.” 

Smith concluded by admitting that it’s hard to be a retailer – both public and private – these days. “You have to deliver outstanding experience, you have to earn the trust of your clients and you need to make the margins.”