Nowadays online shopping is more famous than offline shopping. Different online shops have different techniques to grab the attention of the customers. Stitch Fix is such a brand which always works with the same idea: rely on the predictive to increase its direct sales to consumers. You can buy clothes from stitch fix.
A cold snap on the IPO of Stitch Fix
The US clothing shipping service is struggling to convince investors to compete with Amazon.
Stitch Fix, a personalized clothing delivery service, is an exception in Silicon Valley. The company is run by a woman, is profitable, and has a cautious approach to fundraising – she has raised “only” $ 42 million since its inception in 2011, a small sum compared to many start-ups California.
To continue to grow, the company of 5,800 employees went public last Friday. But it did not have the expected success for its first day of trading: the share price has exceeded its introductory price of only 1%. It has been set at $ 15, below the $ 18 to $ 20 range initially desired. The start-up sold fewer shares than expected (8 million instead of 10), raising 30% less than its target of $ 120 million.
Strong business model
First, Stitch Fix was able to avoid the pangs of overvaluation by preferring not to raise too much money. The IPO allows its 3 investors, including Benchmark (Uber investor), to achieve a great gain, with a valuation rising to $ 1.4 billion against $ 300 million in its last round in 2014.
The company has also proved that it has a solid business model. For the fiscal year ending July 2017, it generated $ 977 million in sales, an increase of 33% in one year. If it made a loss of $ 594,000 in 2017, it has been profitable in the previous three years, boosting its profit to $ 33 million in 2016.
It has also increased its customer base by 33% in one year. 2.4 million consumers received a package with a selection of five garments or accessories from 700 different brands. The customer can choose to keep what he likes, against a commission of 20 dollars and delivery and return are free.
The future of online shopping
Stitch fix is going to be the future of online shopping as it is using high-end technology to categorize the products. The use of powerful algorithms will make this shop favorite to the customers. People will buy clothes from stitch fix.