Stitch Fix, one of the most financially successful D2C brands out there, is doing some minor reinvention. And — in a week when so many big D2C names are struggling — it cheered me up to see how staying true to its mission is helping it stay one step ahead of the competition.
Late last year, the company introduced a direct-buying option to customers, called Shop Your Looks, which lets customers browse and buy clothing outside their regular “fix” of five items.
And after hiring a new president last month, the company's CEO, Katrina Lake, says it is no hurry to replace its CMO.
In a webcast presentation to the Goldman Sachs Technology and Internet Conference in San Francisco, Lake expounded on the direct-buy option, saying it uses the company’s extensive “personalization muscle” to make incremental purchases in between “fixes, allowing [customers] to engage in a personalized way.”
She said the program aids Stitch Fix’s ability to solve the most frustrating part of selling clothing: While there’s a near-infinite number of clothing choices available, only a very tiny percent are even remotely right for any given shopper.
And because the Shop Your Looks feature builds off what Stitch Fix already knows about the user’s size and style preferences, “you’re able to see looks styled for you.” It allows a customer to explore more colors than in the standard 5-item package, for example, or "they may be looking for something specific, like jeans or work clothes.”
Lake said the feature is especially appealing for categories like handbags and shoes. While stylists often include them in their five-item curations for customers, “you may not be in the market for those, so the Fix is less likely to convert those to a sale.”
As the company is testing the feature, she said those sales are amounting to incremental gains, not cannibalized sales. “And there are people who enjoy that browsing and searching experience,” she added. “We built this personalization muscle, and that’s the key differentiator.”
For now, Stitch Fix is limiting the service to current customers, but she believes it may eventually have the potential to reengage former customers or attract new fans.
The presentation also gave Lake a chance to showcase just how well the Stitch Fix model has performed, particularly in a week where D2C luminaries like Casper and Harry’s struggled, and Brandless shut down.
With 3.5 million customers, Stitch Fix has been profitable since 2014, and revenues have been up for six consecutive quarters. The company is committed to a 20% to 25% growth rate.
Lake also addressed changes in leadership, with the addition last month of Elizabeth Spaulding as president. Spaulding, who had been the global head of Bain & Company’s digital practice, will oversee marketing, strategy, product and algorithms.
And while Lake says the company is actively hunting for a new CFO, there is no rush to fill the CMO slot. Deirdre Findlay left late last year after 18 months with the company, signing on as CMO of Condé Nast.
Lake told the Goldman Sachs crowd that for now, she’s watching the continued evolution of marketing before actively recruiting for the job. “It’s an interesting function,” she says, “and there’s this world of quant and performance, and another world that is very important around brand.” As the two diverge and shift, “we are not rushing into that.”
She said the company’s marketing spending formula is also still evolving. “Right now, no channel represents more than 50% of spending. That’s a really good place to be, because it allows us to flex our dollars around a lot of channels, and we are now advertising across all our businesses,” including women’s, men’s and kids.