Stitch Fix, the e-commerce brand on the doorstep of one of the most anticipated IPOs of the year, is a rare example of a brand differentiating itself in the crowded industry of e-commerce through customer experience
With consumer goods companies moving online, we’ve seen brands built on new-age business models. From flash sales to conversational commerce to digitally native brands, the commerce startup space has seen companies of all shapes and sizes in the past 5 years.
But with Amazon continuing their conquest of the digital space, it’s become increasingly difficult to differentiate and compete with the larger players in online retailers. We’ve seen a reorganization of sorts in the e-commerce space, with multiple tens of millions of dollar acquisitions taking place.
So what does Stitch Fix’s public market debut teach us? A lesson we’ve long been taught: customer experience wins.
In a world of slim margins and high growth, Stitch Fix invested in human service, putting them at the forefront of the “assisted commerce” model. Built on developing intimate connections with their customers to carefully craft the right style choices, Stitch Fix has managed to create a customer experience that’s unable to be matched.
What can brands learn from Stitch Fix’s success?
1. Customers come first
With increasing competition, the power dynamic has quickly shifted to the consumers. Brands can no longer offer subpar shopping experiences because customers can quickly and easily search for and purchase from a competitor.
For Stitch Fix, their data-driven customer experience helps them understand when and why people purchase products. They use these in-depth customer profiles to ensure their offering hyper-relevant products to their consumers.
With extremely convenient customer experiences like this, you can see consumer expectations quickly adjusting. From website page load speeds to expected delivery times, everything is happening faster—retailers need to be keeping up.
2. When customers come first, they tend to stick around
Choice, convenience, accessibility. While all of these come at a cost to retailers, integrating them into shopping experiences ultimately pays dividends by increasing customer retention and repeat purchase rates.
Stitch Fix, for example, spends a very small percentage of revenue, a mere 7% percent, on marketing efforts, allowing the virality of a superior customer experience fuel growth.
While acquiring customers does come at a hefty price, TechCrunch’s estimate is $280, those customers stick around for around 3 years. This more than offsets the cost of acquisition and helps Stitch Fix with one of its key differentiators from fellow startup unicorns: profitability.
3. Owning the customer experience is key
While Stitch Fix does it through a highly-curated on-boarding process, retailers have begun to offer excellent service at multiple parts of the customer experience.
With expected shipping time expectations quickly approaching on-demand, offering convenient delivery options is often a first step for retailers. And with some of our partners finding a 169% increase in conversion rates while offering free same-day delivery, it’s easy to see why.