Subscription clothing retailer Stitch Fix (NASDAQ:SFIX) built a personalized styling and fashion retailing business that delights customers. But Amazon's (NASDAQ:AMZN) forays into fashion, like its new Prime Wardrobe tv ads, partnerships with popular brands like J Crew Mercantile, and moves toward learning customer preferences could deter Stitch Fix customers and investors. Can Stitch Fix successfully compete with Amazon in the long term?
I think the answer is yes, and here's why.
1. The personal touch
From its beginnings in 2011, Stitch Fix was built to personalize shopping using vast amounts of data, computer technology and human involvement. Data about a customer's size and style preferences are collected and algorithms make a base set of recommendations, but before a fix is finished, a human stylist hones the software's results to create the final selection. With a deeper understanding of style, situation and nuance, the humans make better product matches. This unique algorithm-human teamwork allows Stitch Fix to master details like fit and preference while simultaneously delivering a personal, human connection. Have you ever heard a Stitch Fix customer rave about and recommend their stylist? I have.
Even better, a Stitch Fix customer's relationship is enhanced via feedback, which is encouraged and generates more vital data for Stitch Fix to succeed with.
2. A focus on fashion
While Amazon will always be the place where a person can buy books, toys, vacuum cleaner bags, cat food, groceries, automotive parts, home services, and practically everything else, Stitch Fix is a fashion company. Stitch Fix is centered around helping you a) save time, and b) look and feel your best. Amazon might be the master of the retail universe, but Stitch Fix owns the role of the wardrobe expert.
It's our mission to change the way people find clothes they love by combining technology with the personal touch of seasoned style experts. The Stitch Fix experience is not merely curated—it's truly personalized to you. We're here to help you save time, look great and evolve your personal style over time.
Feeling fashion challenged and unsure of yourself? Stitch Fix has resources to help, like the Ask a Stylist feature, personalized outfit cards, and online guides like the Stitch Fix blog. While Amazon could replicate all of this, will customers want to get their killer work outfit that makes them feel like a boss at the same place where they buy electronics? Clothing is personal and fashion is about creativity and expression. In this match-up, Stitch Fix can stand out as a brand that's all about individual style, fun, and confidence vs. Amazon's massive everything-store.
3. Customer delight and the surprise factor
Currently, the shopping experiences at Amazon and Stitch Fix are completely different. At Amazon, you search, sort and select (and hope your size is in stock). You have access to nearly limitless product options, which could be a blessing, a curse, a time-suck or a cause of indecision. With Stitch Fix, you subscribe, personalize and wait for a surprise. After creating a profile with your preferences and opinions, your time spent "shopping" is done -- Stitch Fix's software and stylists do the rest until you receive a personalized box of five items to review and choose from.
Stitch Fix is delivering an exceptional, experiential online shopping adventure that's fun, personalized, and builds (hopefully deep) customer relationships over time. Some customers describe receiving a Stitch Fix order like Christmas morning. What's in the box? The excitement of finding an item you love that was chosen especially for you will transform the online shopping experience. Stitch Fix's ability to please subscribers is turning some of its 2.7 million active customers into "Stitch Fix addicts" who buy regularly, refer others, and have few reasons to leave the service for Amazon. New customers are signing up for Stitch Fix too; in the third quarter, Stitch Fix reported a 30% increase year-over-year.
But are all Stitch Fix customers in it for the long term, and can the company keep growing in the face of increasing competition? There's no doubt: Amazon is a formidable competitor. If Amazon constructs personalized, quick-shopping tools that make it a cinch for shoppers to fill their carts with coordinated (in stock) items in the right sizes, Stitch Fix could be in trouble.
For now though, Stitch Fix's personalized shopping experience, data-driven approach, and emphasis on customer relationships outshine Amazon's fashion offerings, giving the upstart the chance to survive, and even thrive in an otherwise Amazon-dominated retail world.