In 2015, Business Insider declared that Stitch Fix is changing the way that women shop for clothes, but it seems that over the past couple of years this innovative e-commerce startup has done so much more—providing a road map that could transform the way small businesses connect and engage with their customers.
Indeed, this startup company (launched in 2011) has taken the concept of personalized service for its customers to a whole new level, leveraging the latest in technological and data management advances to send appealing products to its customers. Although Stitch Fix is a clothing retailer, its business approach has implications for almost every industry. Here’s a closer look:
The Stitch Fix Business Model
So how does Stitch Fix work? Customers start by creating a style profile on the company website. The site compiles all needed personal information and assesses likes, dislikes, and the individual style they are going for. A personal stylist reviews the profile and the data generated from it, and then handpicks five pieces that are delivered to the customer’s door. Items are chosen based not only on style preferences but also the customer’s budget. Once they receive the items, customers can try on each piece and only pay for what they want to keep. Everything else can be sent back (in a prepaid envelope), and the feedback from rejected items is then used to better customize the next delivery.
Stitch Fix combines artificial intelligence (A. I.) and machine algorithms with over 2,000 human stylists to optimize the personalization and level of customer service it’s able to offer its customers. The company uses hundreds of algorithms to do everything from matching products and stylists with clients to assessing how happy a given customer is with the service. The company is even able to scan customer social media activity (such as Pinterest pins) to better pinpoint stylistic preferences and track the evolution of personal style over time. Human stylists have access to all this data, which would take weeks to amass via individual interactions, and are able to easily choose the best available products to send clients.
What This Means for Small Businesses
According to independent industry analyst Jeff Kagan, this is just the beginning of a looming trend in which machine learning becomes more and more integrated into business models. “Many new business models will form with A.I. as the center of their universe….This is the Model T for the A.I. revolution.” The bottom line is, artificial intelligence makes it possible for stylists to do in hours what it used to take weeks to accomplish, while providing a targeted product and a high level of personalized service. As the Harvard Business Review points out, “the traditional experience [brick and mortar shops] isn’t providing what more of today’s consumers want: personalized experiences at lower costs, reduced complexity through curation, and the desire to feel good about their purchases.” HBR terms this “mass customization,” and it may be the formula many businesses need to stay relevant in today’s fast-paced market.
The Stitch Fit model is customer-centric, which is a major reason for the company’s success. But it is also practical, giving stylist employees all the tools they need to provide a high quality service in the shortest amount of time possible. In addition, the model is dynamic, relying on a constant flow of information back and forth from customer to company in real time, enabling progressive improvement of customer service and satisfaction the longer that customer stays with the company. In a market that is ever more competitive, this degree of customer engagement may be just what many small businesses need to take their business to the next level.