"The Clothes That Suit You... AI-Driven Fashion Curation Company 'Stitch Fix' [Hidden Industry Story]"

Founder of US Fashion Company 'Stitch Fix', Katrina Lake
Also Known as the 'Netflix of Fashion'
Focus on 'Customer Experience' is Key

Photo by Stitch Fix official Instagram capture.

[Asia Economy Reporter Heo Midam] "How great would it be if someone who knows my taste well could just pick out clothes for me."

There is a fashion company that started from this very thought. The American company 'Stitch Fix,' which analyzes consumers' tastes and selects clothes that suit them, is the protagonist.

For those who want to buy clothes but have little time to shop, this company is very appealing. Unlike traditional fashion companies that rely on model photos, Stitch Fix considers various factors such as body shape and preferences to recommend products tailored to users, earning it the nickname 'the Netflix of fashion.'

Starting in 2011 with just five employees, Stitch Fix has grown into a company with over 5,000 employees worldwide, thanks to its global popularity. What is the secret behind Stitch Fix's success?

Katrina Lake, founder and CEO of Stitch Fix. Photo by Katrina Lake Instagram capture.

◆ "I wish someone would pick clothes that fit me"... The reason it became a 'clothes-picking' shopping mall

Stitch Fix was founded by Katrina Lake, the founder and CEO, out of a desire to solve a minor inconvenience. In 2011, Lake was busy working while also pursuing an MBA at Harvard University.

One day, Lake needed a black dress to wear to a friend's wedding. She browsed numerous online shopping malls but was overwhelmed by the countless options and couldn't find a dress she liked.

Realizing again how much time and effort it took to buy a single outfit, Lake decided to create a shopping mall that 'picks clothes for you' rather than one where you have to 'choose clothes' yourself. Ultimately, the frustration of "I wish someone would pick the perfect outfit for me" led to the founding of Stitch Fix.

In an interview with a media outlet, she said, "There are hundreds or thousands of clothes on Amazon and eBay. But few people care about the price when buying a single black dress. What people want is just one outfit that makes them look great. I wanted someone to pick that out well for me."

Photo by Katrina Lake, Instagram capture.

However, Stitch Fix struggled at the time of its founding. Lake manually organized people's tastes and recommended clothes based on that, but since all tasks were done by hand, the time and effort invested far outweighed the profits.

In her search for a solution, Lake approached Eric Colson, an engineer who was in charge of recommendation algorithms at Netflix. At the time, Lake said, "I want to change the way people shop," and asked for his help. Colson, intrigued by the new challenge, joined Stitch Fix in 2012 as Chief Algorithm Officer (CAO).

After hiring Colson, Stitch Fix was able to significantly reduce the time needed to select recommended products by utilizing artificial intelligence (AI) algorithms.

Moreover, after AI selects recommended products, Stitch Fix's in-house stylists personally recommend clothes that suit the user. In other words, the AI's recommendations are enhanced by expert human touch to provide the best recommendation service.

◆ Stitch Fix focuses on 'customer experience'... Highly popular among those who struggle with what to wear

The secret to Stitch Fix's success lies in its focus on 'customer experience.' Unlike typical shopping malls, Stitch Fix asks a few basic questions during the membership registration process. These questions cover height, weight, favorite colors, preferred styles, and more.

Based on this, Stitch Fix selects five fashion items for the user: tops, bottoms, shoes, bags, and accessories. The selected items within the customer's specified price range are shipped immediately. Customers keep the items they want and return the rest.

The cost to receive five recommended items is $20 (about 22,600 KRW). If the customer buys even one item, the $20 fee is deducted from the purchase price. When buying all five items, a 25% discount is also offered. Returns are, of course, possible.

Ultimately, the shopping mall proposes clothes that suit the customer instead of the customer choosing clothes from the mall. This has created a strong response among people who struggle with what to wear or those who lack time to shop.

Photo by Stitch Fix official Instagram capture.

◆ Stitch Fix's rapid growth... Company value exceeds 4 trillion KRW

By skillfully combining data-driven algorithms with expert intuition, Stitch Fix has succeeded in gaining strong support from consumers tired of online shopping.

Especially popular among working moms, Stitch Fix's sales soared from $730 million (about 826 billion KRW) in 2016 to $1.58 billion (1.7879 trillion KRW) in 2019, achieving rapid growth in a short period. The estimated company value of Stitch Fix in the U.S. securities industry is between $3 billion and $4 billion (about 4.5284 trillion KRW).

Along with this popularity, the number of users is also increasing. As of last year, 3.4 million people worldwide used Stitch Fix, and the product recommendation service showed a high success rate, with 8 out of 10 users purchasing at least one recommended item.