Stitch Fix, established in 2011 in San Francisco, has disrupted the fashion retail industry. With input from the customer and collaboration between artificial intelligence (AI) and human stylists, the online styling subscription service eliminates the need for their customers to go out and shop for clothing or even browse online, because they deliver personalized recommendations right to their door on a regular schedule. The customers can keep all of the products or return what they don’t like or need. That feedback gets input into the company’s data vaults to make the algorithms even better at determining the preferred style for each person and even identify trends.
In 2017, the company had $1 billion in revenue and 2.2 million active customers, but competitors such as Amazon and Trunk Club are lining up to mimic its style of retail. Here are just a few of the most intriguing ways Stitch Fix uses artificial intelligence in combination with human stylists to propel its business.
Personalization of clothing and accessories
Stitch Fix has combined the expertise of personal stylists with the insight and efficiency of artificial intelligence to analyze data on style trends, body measurements, customer feedback and preferences to arm the human stylists with a culled down version of possible recommendations. This helps the company provide its customers with personalized style recommendations that fit their lifestyle and budgets.
Improve satisfaction rate and lower return rate
The better the Stitch Fix stylists—human and machines—are at providing their customers with products they will love, the better their business runs. As they invest in merchandise they know their customers will love, the less they waste on warehouse space, return costs and donating items that weren’t sold. As Eric Colson, chief algorithm officer at Stitch Fix, said, “Our business is getting relevant things into the hands of our customers.”
Develop new styles
Back in 2012, Stitch Fix had one machine learning algorithm, today they have hundreds. Using the data it collects, the company is designing its own styles known as Hybrid Designs. They think of each style as a collection of attributes such as color, arm length and neckline. Then, they look at the feedback that’s available for each of these attributes. By recombining attributes and even mutating them slightly, Stitch Fix is able to create new designs to share with its human designers to vet the final styles that make it into their inventory. Then, the styling algorithm will get the new products into the hands of customers and when they share their feedback, the cycle of evolution continues.
Know the client
Stitch Fix not only asks customers to fill out a style profile to determine style, size and prize preferences but records every touch point it has with clients and considers the “state” of each customer at any given time (starting a new job, have a special event, going through a life transition such as divorce). As the algorithms identify a shift in “state, ” it can help deliver the most relevant items and ultimately provide info to inform system level impacts.
Artificial intelligence is at work through all aspects of the warehouse and delivery system of Stitch Fix. When a shipment is requested, an algorithm determines and assigns it to a warehouse based on the location of the client and the inventory of the warehouse and its match to a customer’s style among other considerations. Once items are selected for shipment, algorithms optimize the pick route to fill the box and look at possible combinations that would allow shipments to be picked at the same time.
Stitch Fix is just as concerned with inventory management as traditional brick-and-mortar stores. As clients receive and keep merchandise, they need to restock their inventory to give stylists a large enough inventory to meet demand. They need to figure out how many of each style to purchase so that it meets demand, but there’s no extras they can’t sell. The company uses algorithms to help optimize these and other complex inventory management issues.
While it may have been easier to outline the ways algorithms aren’t used by Stitch Fix, one thing is certain, the company has shown how collaboration between AI machines and humans with both doing what they do best is good business. Even with AI involved, humans are essential in the process, but when they work together the results are supercharged productivity and effectiveness.
Bernard Marr is a bestselling author, keynote speaker, and advisor to companies and governments. He has worked with and advised many of the world's best-known organisations. LinkedIn has recently ranked Bernard as one of the top 10 Business Influencers in the world (in fact, No 5 - just behind Bill Gates and Richard Branson). He writes on the topics of intelligent business performance for various publications including Forbes, HuffPost, and LinkedIn Pulse. His blogs and SlideShare presentation have millions of readers.