Stitch Fix, which relies on data analytics along with personal stylists to provide personalized subscription boxes, is looking to raise $100 million, according to its filing, though that number could change. The company’s stock will appear as SFIX on the Nasdaq.
Subscription boxes have been a growing part of retail—spanning all categories from apparel to pet goods—since BirchBox hit the scene in 2010 with its beauty sampling concept. According to NPD research, 15 percent of consumers have ordered subscription box services, while 14 percent haven’t ordered them but plan to in the future. The global data company said Stitch Fix subscribers give one-third of their online apparel wallet to Stitch Fix.
[Read more about how subscription boxes have muscled into apparel: Subscription Services Deliver on Personalization and Experiences]
Over time, the box model has evolved with companies looking for ways to better target their fans’ tastes with customized selections.
Stitch Fix, which launched in 2011, requires shoppers to answer a battery of style questions that it uses to pick clothes that match their personal tastes. To get it right, the company has more than 3,000 stylists and 80 data scientists. In addition to a wide variety of brands like Theory, Kate Spade, John Varvatos and JBrand, the company is also creating its own pieces based on the customer data it has amassed.
Blue Apron’s IPO experience underscores the challenges inherent in this sector—chief among them are customer acquisition and competition. The food service company went public in June and has struggled to keep its footing. The announcement that Amazon was testing a meal kit service and its acquisition of Whole Foods have been problematic for Blue Apron. On Thursday the company said it would be laying off 6 percent of its staff, which is estimated to equate to about 300 employees.
With so many players jumping into this space—just in the last few days both Under Armour and Baby Gap have announced their own box plans—it’s difficult for these companies to differentiate themselves. Stitch Fix, too, is facing competition from Amazon, which is piloting a service that allows Prime shoppers to select a box full of apparel and only pay for the items they keep.