Stitch Fix’s Algorithm-Based Business Model

Nancy J. Rabolt , Judy K. Miler

Business Case
Source: Bloomsbury Fashion Business Cases
DOI: 10.5040/9781474208796.0060
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Abstract

Stitch Fix is an e-commerce, customizable clothing service that sends a box of five items, labelled by the company as a “Fix,” to customers. The items selected are based on company recommendations derived from data driven algorithms. Their two million clients want convenience, but also want to discover new clothing that fits both their individual bodies and lifestyles. Upon signing up to Stitch Fix, customers complete a survey to outline their body dimensions and personal preferences. Algorithms produce personal recommendations for each individual based on the results—a human Stitch Fix stylist then takes this prediction and determines whether it seems right for a particular shopper. Customers pay for what they keep and send back what they don’t want postage free. Although Stitch Fix was only originally able to cater to a female clientele they have, in recent years, grown in their capacity and now stock men’s and plus-size ranges; the company also have plans to begin stocking children’s ranges in the near future.

Stitch Fix represents a company whose main business model is to provide fashion recommendations that are based on data analysis. This case consequently explores how changes in consumer behavior to evermore digital and convenience-driven lifestyles can concurrently affect the retail landscape. Upon completion of this case, students will also be able to determine the challenges that face innovative e-commerce companies such as Stitch Fix, such as whether they are able to present themselves as a sustainable business and thus retain their consumer base.


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