Stitch Fix is set to test its might with an IPO.
The data-rich subscription company filed confidentially, a special provision allowed for startups, according to Tech Crunch.
The company, which has garnered many headlines for its deft use of data, is treading rocky ground, as illustrated by the Blue Apron IPO. In that case, the meal kit business has struggled to gather and sustain membership and their stock hasn’t been helped by Amazon’s entrance into the category.
The e-commerce giant has inserted itself into the apparel box market as well with the debut of Prime Wardrobe. Though it’s not a subscription model, the company’s interest in the space plus its bullish behavior where apparel is concerned in general could dim prospects for Stitch Fix.
[Read about how the apparel subscription market is doing in general: Subscription Services Could be a Boon for Apparel—And Here’s Why]
That said, the danger is less the box and more the fact that one area in which Stitch Fix seemed to excel is in collecting and analyzing consumer data— which is one of Amazon’s core competencies as well. So just as Stitch Fix is developing private label pieces based on shopper tastes, Amazon is rolling out collections based on its vast user history.
With Amazon, Wardrobe is risk free. Prime members simply select the items they wish to try and only pay for the things if they opt to keep. With Stitch Fix, users can’t choose what they get—though the company’s algorithms are supposed to hone in on their preferences over time—and they face a $20 stylist’s fee if they don’t buy anything they received.
[Read more about the advantages of subscription boxes: Subscription Services Deliver on Personalization and Experiences]
Once Stitch Fix makes its public debut, the market will indicate whether the company’s model sufficiently differentiates itself from its competitors. Next, Stitch Fix will need to release its financials and then start the task of drumming up investor interest.
Stitch Fix, which launched in 2011, has more more than 5,700 employees, comprised of 3,400 stylists and more than 80 data scientists.