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Case Details

Case Code: ITSY096
Case Length: 13 Pages
Period: 2011 - 2019     
Pub Date: 2018
Teaching Note: Available
Price:Rs.300
Organization : Stitch Fix
Industry : Fashion; E-commerce
Countries : US
Themes:  Analytics/ Big Data Strategy
Case Studies  
Business Strategy
Marketing
Finance
Human Resource Management
IT and Systems
Operations
Economics
Leadership & Entrepreneurship

Algorithms to Style People: Stitch Fix Applies Data to Fashion

 

ABSTRACT

 
The case discusses how Stitch Fix, an online personal styling service founded by Katrina Lake (Lake), employed algorithms to select apparel for its customers according to their style, fit, and price preferences. In the course of recommending apparel for its customers, the company employed algorithms related to, among others, collaborative filtering and mixed-effects modeling. The case also describes how human beings were used to augment algorithms in styling customers. It also points out how the algorithms learnt from the feedback given by the customers for a specific shipment to select styles for subsequent shipments. The case describes how algorithms were employed by the company to perform other key tasks such as allocating a shipment request to a warehouse and computing the amount of and the type of inventory that the company should purchase.

The case goes on to describe how machine learning algorithms were employed by Stitch Fix in new product development – the company’s in-house brands eventually contributed over 20% to its turnover. Data mining was employed by Stitch Fix to enter new categories such as plus size for women and premium-brand offerings. The case also describes the challenges faced by the company such as limits to the amount of shopping that its customers could do, intense competition from e-commerce players such as Amazon, and increasing advertising expenses eating into the company’s profits.
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Issues

The case is structured to achieve the following teaching objectives:
  • Understand how algorithms can be employed to aid various operations in a company, including for making personalized recommendations and aiding new product development.
  • Identify the areas where human capabilities can augment algorithms.
  • Understand how Stitch Fix employed data to expand its business.
Contents
INTRODUCTION
THE ORIGINS
ALGORITHMS AND THE HUMAN TOUCH
PREDICTING DEMAND AND FASHION TRENDS
LAUNCH OF IN-HOUSE BRANDS
EXPANSION INTO NEW CATEGORIES
GROWING FROM STRENGTH TO STRENGTH
CHINKS IN STITCH FIX’S ARMOR?
EXHIBITS

Keywords

Algorithms, Fashion, Online personal styling service,Big data, e-commerce, Business Analytics, Marketing Analytics, Service marketing, Consumer behavior, Natural language processing, Customer’s level of satisfaction, Human-Machine Algorithms, Warehouse assignment ; Inventory management; Entrepreneurship; Blue Ocean Strategy

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