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Is the Stitch Fix Model the Future of Amazon Fashion?

Taking direct aim at Stitch Fix, Amazon’s newest service will send subscribers boxes of clothing, shoes and accessories selected by Amazon’s fashion team. But whether Amazon can replicate Stitch Fix's success remains to be seen.
Amazon's new personal shopping feature | Source: Courtesy
  • Cathaleen Chen

NEW YORK, United States — Amazon secured its status as one of the world's biggest fashion retailers by offering affordability and convenience. With the launch of a new subscription box service, the e-commerce giant hopes to convince consumers it can be stylish too.

Prime members who opt into Personal Shopper will receive a monthly box containing up to eight items of clothing, shoes and accessories selected by Amazon's fashion team. Many brands that sell on Amazon's marketplace, including Levi's, Loeffler Randall, Calvin KleinStuart Weitzman and J Brand, are participating.

The service may sound familiar: Stitch Fix has been mailing out personalised boxes of clothes since 2011, and today has over 3 million subscribers in the US. Stitch Fix stock fell as much as 8 percent on Tuesday following media reports about Personal Shopper, ending the day off 2 percent at $25.47 a share.

The idea behind Personal Shopper is to allow consumers to try on garments at home without being charged, a feature that Prime Wardrobe provided without the curation aspect. Anything that the shopper doesn’t want can be sent back free of charge within seven days of receiving the box. Initially the service is being offered only for women, at a cost of $4.99 per month. Amazon plans to introduce the same service for menswear down the line.

Whether Amazon can replicate Stitch Fix’s success remains to be seen. The marketplace has an unparallelled logistics network and product assortment, and can pitch its latest service to its vast member base.

Prime Wardrobe never tackled the challenge of finding the right products.

“The cost to acquire new customers has been on the rise at Stitch Fix — whereas Amazon has 100+ million prime members that they can advertise their Personal Shopper service to on day one (with little to no additional cost),” Wells Fargo analyst Ike Boruchow wrote in a note Tuesday. “The apparel space continues to evolve very quickly, and competition is clearly heating up.”

Stitch Fix did not respond to a request for comment.

Like Personal Shopper, Prime Wardrobe, which allows customers to try on clothes before they buy them, made a splash among the retail sector at large when it was announced two years ago. Shares of Nordstrom, Macy's and Asos sank, and one analyst even called it "another nail in the coffin for the department-store sector."

But the service never took off. In a 2018 Gartner survey of 1,500 Prime subscribers, only 3 percent used Prime Wardrobe, dead last among 13 Amazon services offered through its membership programme.

Despite that and other high-profile launches, Amazon’s overwhelming selection and sometimes confusing layout have limited its ability to fully capitalise on its clout. Many consumers still see the marketplace as a place to buy essentials or cheap basics from the site’s private-label lines.

“While Amazon excels at basics like underwear and socks and lower-priced activewear … Prime Wardrobe never tackled the challenge of finding the right products, and you have to sift through a million products by yourself,” said Oweise Khazi, director in Gartner’s marketing practice.

Personal Shopper could help Amazon convince high-end brands to sell through the site, as the service’s separate interface ensures luxury labels won’t be listed alongside toilet paper and batteries.

Like Stitch Fix, Prime users are invited to complete a survey about their style and fit preferences, and then “Amazon’s stylist team will do the shopping for them, pulling personalised recommendations to meet their needs,” the company wrote in a blog post. Members will be able to preview the recommendations and choose which items for Amazon to ship.

"Personal Shopper by Prime Wardrobe provides the ultimate style inspiration and unmatched personalised recommendations, thanks to our fun and engaging style profile," Amazon Fashion's Chief Technology Officer Tony Bacos said in an email statement. "Customers indicate their preference for brands, styles, fit and more – and as customers keep engaging with Personal Shopper, their curated picks will get even better."

Having access to customer preferences is an asset in and of itself, according to Sarah Willersdorf, managing director and partner at Boston Consulting Group. "If nothing more, if they can get a large number of consumers to fill in the style survey and declare their style and fit preferences and budget, that’s a tremendous amount of information" — information that can be effectively used to better target products to consumers, she said.

The apparel space continues to evolve very quickly, and competition is clearly heating up.

Amazon's Personal Shopper program could also be a way for the retailer to promote its private-label apparel lines, for which Amazon has made a huge push in the past few years. As of 2017, it had more than 60 private labels, with the majority on the lower end of the price spectrum.

Winning customers over Stitch Fix will be a tough task. In its third-quarter earnings report, Stitch Fix reported quarterly revenue growth of 29 percent, to $409 million, and boasted an active client list of 3.1 million people — 17 percent higher than a year earlier. Its net income dropped to $7 million, down from $9.5 million from a year ago.

"Stitch Fix grew tremendous revenue and it is profitable which is rare for these Silicon Valley startups," said Willersdorf. Still, if Amazon can wield the same data science technology in combination with the human touch of stylists, Personal Shopper could be a "huge game-changer," she added.

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