The Next Wave of E-Commerce | Katrina Lake on Invest Like the Best

 Check out the Invest Like the Best Episode Page & Show Notes

Key Takeaways

  •  The main problem in apparel: finding clothes that fit customers and that customers love
    • “Nobody was solving that core problem of how do I actually identify the clothes on this planet, out of the millions of things out there, that you specifically are going to love” Katrina Lake
  •  Price and speed of delivery are important in the apparel industry, but at the end of the day people want clothes that they like:
    • “Yes, price, speed, and delivery are important in apparel but actually more important is it right for you? Does it fit?” Katrina Lake
  • Stitch Fix is solving this problem by using data science to offer clothing recommendations that people will like
    • Stitch Fix wants to become your personalized styler:
      • “What we’re really trying to do is get to this personalized storefront for every person” Katrina Lake
  • Stitch Fix was cash-flow positive in 2014 and went from $0 to $1 billion in 5 years, and Katrina still had trouble raising money from VCs
    • “I was forced to be capital efficient. I had to make the most of our balance sheet in order to survive.” – Katrina Lake
  • Two of Katrina’s superpowers as a founder was her ability to recruit amazing people to come work at Stitch Fix and her authentic leadership style:
    • “Absolutely recruiting, I never, ever, ever would have been able to do all of the things that we did without having the incredible people on the team” – Katrina Lake
    • “The only thing that I had was this ability to be authentic and connect with people and to bring people along”

Intro

  • Katrina Lake (@kmlake) is the co-founder and CEO of Stitch Fix. Stitch Fix is a multi-billion-dollar public company which has brought an entirely new model to retail apparel by combining data science, technology, and personal stylists to create a unique shopping experience tailored to the individual consumer.
  • Host: Patrick O’Shaughnessy (@patrick_oshag)

Thoughts on E-commerce  

  • One of the reasons Katrina started Stitch Fix is because she saw that the penetration of apparel in eCommerce was stunning low (less than 20%)
  • The main problem to solve in apparel is finding clothes that fit customers and that customers love
    • “Nobody was solving that core problem of how do I actually identify the clothes on this planet, out of the millions of things out there, that you specifically are going to love” Katrina Lake
  • The first stage of eCommerce was this search and filter world where you would search for the item you wanted
    • However, now that there are millions of products online, filtering through all of them is a near-impossible task

Using Data Science To Improve E-commerce

  • Price and speed of delivery are important in the apparel industry, but at the end of the day people want clothes that they like:
    • “Yes, price, speed, and delivery are important in apparel but actually more important is it right for you? Does it fit?” Katrina Lake
      • Stitch Fix is solving this problem by using data science to offer clothing recommendations that people will like
        • Stitch Fix wants to become your personalized styler:
          • “What we’re really trying to do is get to this personalized storefront for every person” 
  • Now that Stitch Fix has sold over $5 billion worth of clothes, they can use that data to make better decisions and recommendations
    • Not only does Stitch Fix use data science, but it also relies on human fashion stylists to understand customer needs and make recommendations
  • Stitch Fix shares its data with vendors to help them understand who is buying what kinds of clothes
    • “We need our vendors to be successful in order for our model to work” – Katrina Lake
      • Vendors also iterate their products based on the feedback that Stitch Fix gets from its customers

Recruiting Capital & People 

  • Stitch Fix was cash-flow positive in 2014 and went from $0 to $1 billion in 5 years, and Katrina still had trouble raising money from VCs
    • “I was forced to be capital efficient. I had to make the most of our balance sheet in order to survive.” – Katrina Lake
      • Fortunately, Katrina was able to find ways to allocate the capital efficiently and effectively, and gain the attention of Bill Gurley
        • “We were able to get to the point where we had so much traction you couldn’t ignore it and Bill Gurley from Benchmark saw that” 
  • Two of Katrina’s superpowers as a founder was her ability to recruit amazing people to work at Stitch Fix and her authentic leadership style:
    • “Absolutely recruiting, I never, ever, ever would have been able to do all of the things that we did without having the incredible people on the team” – Katrina Lake
    • “The only thing that I had was this ability to be authentic and connect with people and to bring people along”

Two Big Breaks For Stitch Fix

  • A lot of bloggers loved Stitch Fix because it gave them something new to write about each time they got a package:
    • “It just created this really engaging content that really made bloggers lives easier” – Katrina Lake
      • “We had all these small to medium size bloggers that were discovering Stitch Fix and starting to write about it and that created this virality which probably would’ve cost us millions of dollars in marketing”
  • When Bill Gurley invested in Stitch Fix, it gave Katrina the confidence that her company was doing well and she was on the right track:
    • “This works. I don’t get it, why aren’t people excited about this?…You look at the numbers and it was working.” – Katrina Lake 
      • “When I sat down with Bill and his excitement and his understanding and his belief in the business, it just made a big mental impact on me…gave me a dose of really needed confidence and validation” 

Future of Stitch Fix & Shopping 

  • Stitch Fix plans on creating their own exclusive brand in the future based on all of the data and feedback they’ve gotten from customers
  • Act 1 for Stitch Fix was the women’s business. Act 2 was entering men’s, plus size, and kids clothing. Now, Act 3 is figuring out how to use their recommendation machine to capitalize on their data. 
  • New shopping trends: 
    • People are finding brands and clothing they like through social media and influencers
    • People no longer want the new “It” item, they want to have their own individual style and show their uniqueness
    • People are rethinking fast fashion and instead want clothes that last 

Additional Notes

  • Not all data is created equally. Buying data from a third-party isn’t as valuable as having direct data from your customers.
  • Right now is the most exciting time to be in retail. COVID has changed the retail industry and the shopping habits of consumers. There are always opportunities to be found in changing times.
Invest Like the Best : , , , , ,
Notes By Alex Wiec

More Notes on these topics

Top Insights and Tactics From

31 Best Podcasts of All Time

FREE when you join over 12,000 subscribers to the
Podcast Notes newsletter

No Thanks