Is fashion e-commerce site Stitch Fix just another gimmick in a box? Bill Gurley doesn't think so
Katrina Lake got into Harvard Business School with an essay detailing the company she dreamed of starting. It would be a fashion e-commerce business that would ship personalized boxes of clothes to women. Clothing picks would marry stylist expertise and data analytics, art and style. Lake impressed Harvard, got accepted, and immediately started planning her business. Her second to last month of Business School, the first box (a "fix") shipped. After graduating, she headed to San Francisco to set up her startup shop.
Now, two and a half years later, Stitch Fix is poised to play the scaling game. It announced today that it raised a $12 million Series B from Benchmark. With a killer list of execs running it, this is a company to watch. Benchmark's Bill Gurley must agree, because he himself will sit on the board.
Stitch Fix just raised its Series A in February, and it wasn't out looking for funding. But when Lake and Gurley met, "I was super impressed with how well he knew retail and he seemed like a real value added investor who would help us scale the company," Lake says. "That's what made the round happen."
The timing was fortuitous. Despite raising its recent Series A, Stitch Fix was scaling at a rate that Lake hadn't expected. They now have five times the customers they did back in February, and in order to meet demand they needed to go bigger.
A quick search online of the Stitch Fix name will surface all its fans, who blog about it whenever they receive a box. I spent a solid hour losing myself in the reviews. Like most women, I think clothes are fun. I certainly wouldn't consider myself a hardcore fashionista, but the entries of the Stitch Fix users captivated me.
With every Stitch Fix, a person receives five items that have been hand selected by a stylist. The stylist picks the items by looking at the customer's profile, noting their likes and dislikes, skimming their Pinterest boards if they have them, and consulting the results of a proprietary algorithm designed by Stitch Fix. The algorithm takes into account the woman's measurements, budget, and other data and then makes clothing recommendations about which items they might like.
This isn't the first time this week I've written a story about data meeting fashion. Earlier, I covered a Kickstarter campaign for a company called Threadmason that claims it has built the perfect range of t-shirts for men, with 24 individual sizes tailored to various body shapes.
Since Stitchfix boxes include a range of clothes -- tunics, pants, scarves, accessories -- Stitchfix can't promise the 'perfect fit' the way Threadmason does. That said, the company claims that on average users keep at least one item.
In skimming the blogs, that seems to be the case. Women have photographed themselves in each of the items they received, reviewing what they think of them. They're honest, and some of the clothes look terrible and are a total bust. But in all the blogs I found the women kept at least one piece.
I liked reading these reviews because you could sense the women's excitement through them. It's like a little kid opening a gift at Christmas time. That's exactly the appeal of Stitch Fix -- and similar services like Birchbox. You never know what you're going to get. The dream fashion piece that you can't live without might be just around the corner. And it seems magical that there's a professional stylist and some proprietary algorithm out there that's focused solely on making you look awesome.
Looking at the pictures, I haven't seen very many Stitch Fix picks that would appeal to me. I don't do patterns, I don't do stripes, and I don't do polka dots.
But that's the whole point right? It's personalized fashion, so what someone else loves another may hate. Like this ugly tunic. One reviewer got a handful of clothes that I envied, so that gives me hope that Stitch Fix has a wider range of fashion than what I've seen in most of the blogs.
The cost isn't so bad either. Individual items are around $65 a piece. It costs $20 to use the service, but shipping -- and return shipping -- is free. If you end up keeping any items, the $20 gets credited towards your purchase.
Stitch Fix seems to have all the pieces in place. Its executive roster is a veritable dream team for an e-commerce fashion company. I personally wouldn't go betting money against them.
Here's the breakdown of who Lake has assembled around her and what they bring to the table. She's brought on Eric Colson, formerly the Vice President of Data Science & Engineering from Netflix, Mike Smith, formerly the COO of Walmart, Lisa Bougie, formerly the general manager of emerging markets for Nike, and Jennifer Olsen, formerly the chief marketing officer at Crate & Barrel.
So right there you've got seasoned experts in data analytics, operations, merchandising, and marketing. Plus Lake herself, who comes from a consulting background in brick and mortar retail.
And that doesn't even include the board, which along with Bill Gurley also has Marka Hansen, the former president of North America for Gap, and John Fleming, the CEO of Walmart.com. Holy shit. It's the sort of lineup startup founders wouldn't even dream about in their wildest fantasies.
Lake is smart -- she's clearly surrounding herself with well-versed, experienced people with deep ties to traditional retail. One of the biggest challenges in retail is getting the logistics right: clothing suppliers, ordering, shipping, inventory, financial planning. These seasoned veterans' expertise will no doubt be useful.
Of course, Lake doesn't get all the credit. Bill Gurley has helped with the recent hires. "Bill spoke with at least two of the three of them and he certainly helped the closing process," Lake says.
Lake says the biggest challenge ahead will be scaling while maintaining customer trust. "The reason Benchmark is interested in a company like us is the early traction but also the early customer loyalty and connection with the company," Lake says.
It's hard to imagine a problem this dream team couldn't tackle.
[Image courtesy Madison Mayberry]