Dive Brief:
- Stitch Fix is once again requiring potential customers to sign up for its styling service and order a box of clothing curated by a stylist in order to shop its “Freestyle” e-commerce site, according to its Frequently Asked Questions section. The e-retailer eliminated that restriction a year ago.
- The prerequisite was reinstituted a few weeks ago, according to an employee who requested anonymity because they aren’t authorized to discuss company details. A Stitch Fix spokesperson declined to confirm when the change was made or comment on why.
- Stitch Fix has experimented with purchase modes beyond its box business since 2019 with “Shop Your Looks” and “direct buy” options. The company renamed direct buy “Freestyle” shortly after opening it to all consumers, billing it as a way to reach more shoppers.
Dive Insight:
Stitch Fix has watched its active client base shrink and its losses widen since introducing Freestyle last year.
The company touts its algorithm and human stylists as a team effort in what it says is a unique level of personalization. But many analysts increasingly see it as a niche segment with a limited audience. Nordstrom shuttered its similar Trunk Club business earlier this year, and ThredUp ended its version last year.
Freestyle was supposed to bolster the company’s total addressable market, but almost immediately began to cannabilize the box business. In Stitch Fix’s most recent fiscal year, just ended, Freestyle sales grew 21%, outpacing total company sales, which fell 1.4%.
In a conference call with analysts earlier this month, CEO Elizabeth Spaulding said the company is working at better integrating and “blurring” Fix and Freestyle “and just making it easier to be participating across that full ecosystem,” though she didn’t indicate that would entail again closing the site to those who haven't ordered a box.
“We know our best happiest clients are engaging with both [Fix and Freestyle],” she said, according to a transcript from Seeking Alpha.
Google searches sent customers to Freestyle, but the company has found that “starting with a Fix is a great entry point,” she also said. “We do acquire clients through kind of landing on product detail pages, but I'd say our core customer activation focus is really through starting with the full ecosystem and starting with the Fix right now.”
Chasing new clients with a more traditional e-commerce option makes sense, but endangers the more reliable, stickier box business, according to Michelle Bacharach, CEO and founder of FindMine, whose tech provides personalized style guidance for online customers of brands like Adidas, Cole Haan and BCBG. However, tying the two options so tightly isn’t much of a solution because customers only need to order one Fix box — what Bacharach called “the one and done trap.”
Still, limiting Freestyle could be the right move, though more experimenting may be needed, according to Suzi Tripp, vice president of insights at advertising agency Brooks Bell. Creating a lower entry point via Freestyle “undermined the magic” of the high-touch styling service that gave Stitch Fix’s customers “a sense of being known, valued, cared for,” she said by email.
“I think Stitch Fix is seeing the effects of that. However, it knows how to turn subscribers into repeat customers. By blending that with Freestyle, it is trying to get back to its roots while giving the a la carte experience a chance,” Tripp said. “I personally like this strategy. Finding the right balance is going to take multiple iterations. I think this one could be the best for Stitch Fix long term."
