Stitch Fix: Revolutionizing Personalization With Data Case Solution
Threats of substitute products
- The cheaper product is available from other industries.
- Substitute product provided better quality and service as compared to Stitch fix.
- The switching cost to substitute products is comparatively lower.
- with customers raising the switching cost.
Bargaining power of suppliers
- This force is strong when the switching cost from one supplier to other is high for the buyers.
- Developing long term relationship with suppliers will help the company inminimizing this threat.
- This threat can be reduced by finding an alternate way of producing the product but it requires high expertise.
Bargaining power of buyers
- Bargaining power of buyers can be enhanced by concentrated customer base strategy.
- Bargaining power of buyers can be increased by customer’s high market knowledge and purchase of standardize product.
- This threat can be reduced by diversifying the customer base.
- Diversification strategies require new products as well as a new market segment.
Market trend
One of the fastest expanding industries in the fashion business is that of online stylist services. The explanation is simple: the sector is feasible and lucrative because of the services, goods and the aspect of practical approach. Customers from everywhere in the country have been flocking to online stylists such as Stitch Fix and the Stylist.
Additionally, because of the ease of the internet usage, online purchases has become one of the fastest expanding sectors. Customers tend to shop through internet portals because online shops provide a larger range. As a result, in today's fast-paced world, individuals buy and acquire online businesses to meet their fashion demands.
Because the internet stylist sector is very new, sales and total profit margins are not particularly high. Therefore, in the next five to ten years, these companies' profit margins and success ratios are expected to rise.
Customer value preposition
The three core customer value preposition offered by Stitch fix are
- Customization
- Convenience
- Pricing
Customization
Customization service has been introduced by the company which is done by filling of online survey about rice, size and style preferences. Then the provided evidence is analyzed by the analyst with the available details from variable sources. The other sources includes outline of clients from different social media websites. The information of the client is analyzed which help Stylist to select best fit representation.
Convenience
Convenience has been offered by the organization for the ease to its customers. They can purchase clothing items any time as per to their convenience. Each product offered by them contains attracting tips of fashion.
Price
Pricing is another value preposition offered by the company.Stylist. charge only $20 for its service. Apparels average price of each item is $55. There is variation in price for different products. Clients are offered 25% discount on their whole purchase.
Recent results
In November 2017, Stitch Fix went public, collecting $120 million via the sale of $15 per share shares. This was lower than the $18-$20 price range that the firm had anticipated. Owners were anxious about Stitch Fix's capacity to be successful in the market due of the various streaming services. Shares traded at $51.19 per share in September 2018. The stock then traded at $35.02 per share in December 2019. This was the cheapest in almost a month, with shareholder’s fears over Amazon's Prime Wardrobe fueling much of the anxiety.In calendar year 2018, Stitch Fix's net sales was $1,226.5 million, up 25.5 percent from the previous year. This was in line with a year-over-year growth of 25% (2.7 million) in active users(Exhibit 2).
Future implications
- Stitch could successfully tap into the market of Ipsy, subscription service which provides cosmetic samples and charge $10 per month.
- An individualized touch would distinguish a Stitch Fix cosmetics service from that of a firm like Ipsy, which delivered identical goods to its members every month with no customization.
- Company’s services could be increased by adding cosmetics as an extra.
- Customers could order the outfits directly without having to go stylist by the introduction of personalized outfits for customers........................
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