Question

How Stitch Fix Controls Inventory and Customer Experience San Francisco-based Stitch Fix embodies what founder and CEO Katrina Lake envisions as the future of apparel retailing. Lake observed retailers seeking organizational change only after an innovator entered the market, and she was determined to get ahead of the curve. In the Internet age, what would be the alternative to buying clothes in a store or from a catalog? Most retailers offer online shopping at a website that functions as a catalog. But information technology offers more than order taking; it also can gather and analyze massive quantities of data, so managers can use the analysis to improve decisions. Lake decided to apply these capabilities to make retailing more like a personal shopping assistant. She created Stitch Fix as a retailer grounded in data science. The focus on data is apparent in its hiring of more than 80 data scientists, who work in a group reporting directly to the CEO. Typically, data analytics is a support function reporting to a technology or other support executive, but this organizational structure keeps the company's leaders focused on data as a driver of success. Data collection begins when consumers sign up to receive Stitch Fix boxes. They complete a questionnaire about their size, tastes, desired price ranges, and clothing needs. Periodically, according to the schedule selected by the consumer, Stitch Fix sends out a box containing several items compatible with the consumer's questionnaire responses. Clothing purchases have an emotional component, so human stylists make the final selections in each box based on the data-driven recommendations, personal information that shoppers choose to share, and their own sense of style. For each box, the company charges a $20 styling fee, which is applied to reduce the price of any items purchased. The consumer decides which items to keep and returns the others along with feedback. The choices and feedback shape the next round of selections. Stitch Fix also compiles data across millions of shoppers to find patterns. For example, men tend to overstate their height, so the software adjusts inseam lengths when selecting pants for male shoppers, and women over 40 often request sleeves, so Stitch Fix added more sleeved shirts to its inventory. While some adjustments involve human decision making, Stitch Fix also applies machine learning, in which software applies the results of past decisions-say, that a client tends to select certain colors of shirts or that a particular ratio of specific measurements will make a shirt appealing to men with large chest sizes—to adjust its recommendations.

Answer 1

Answer 1) Effectiveness & Efficiency defines the organizational performance. To keep up with the pace & ahead of curve Stitch-fix a has to maintain its inventory, look for why questions when customers return the package. With the success from the idea of Stitch-fix many competitors are trying to enter into this field. Therefore, Stitch-fix has to find more innovative ways to retain its loyal customers to lower down churn rate. Stitch-fix uses Artificial Intelligence & Data Analytics as a helping hand to target its customers & is successful because of efficient use of technology. This approach makes Stitch-fix different & unique from others. To maintain this effectiveness & efficiency Stitch-fix has to think ahead of its competitor, so that no one can take its place. They can encourage customers to put unpackaging video on the website so that the new customers will get a clear idea about its service, or they can ask customers to put clear & open feedback on the website. This firmly helps to build a good market image of Stitch Fix & add-on to enhance its effectiveness & efficiency.

Answer 2) Stitch Fix organizational culture supports its success as it uses a team of highly professional & educated employees & sets them free to work in their own way by applying their skills freely to bring change & encourage innovation. They directly report to the CEO about their work. Stitch Fix hires local stylists so that they can provide the local taste to their customers. The efficient team of employees works day-night to provide satisfaction to customers. Stitch Fix provides data of customers to its employees making their work simple & easier. Employees work on data collected through questionnaires to generate personalized experience for customers. Stitch Fix freely allows its employees to apply their skills throughout the organization by utilizing customer data. The free & liberal work culture encourages them to work in an innovative manner. Stitch Fix sets employees free to work making them to work more than their scope. Data scientists were hired to solve the problem associated with data & writing code for selecting clothes, but due to the free work culture of Stitch Fix, the group has also created programs for timing reorders of inventory, telling which warehouses will fill particular orders, and arranging work flow in warehouses. This shows how the motivated team of employees supports Stitch Fix in achieving its goal.

Answer 3) Stitch-fix success shows technology plays a key role in growth of any organization. Stitch Fix is a result of utilization of data science technology making Katrina Lake's envision real. Traditionally, retailers offer online shopping that functions as a catalog & order taking system. But, information technology offers more than order taking; it also can gather & analyze massive quantities of data, so managers can use the analysis to improve decisions. Lake decided to apply these capabilities to make retailing more like a personal shopping assistant & Stitch Fix establishment resulted in bringing drastic change in traditional online shopping, making competitors & other clothing retailers to think about providing more personalized experience to their customers. They have to work on other aspects of online shopping such as personalization of clothes, faster delivery, wide range of variety of clothes to customers, etc.

Response from other retailers make Stitch Fix to bring organizational change. Stitch fix is successful because of the use of data driven technology to generate true personalized value to customers. When others are providing the same value to the customer, then Stitch Fix has to think of more innovative ways to be ahead of the curve.