How Will The Retail Form Change In The Future?

When we talk about subscribing to electricity providers, Stitch Fix must be the one that can not be turned around.

According to the world clothing shoes and hat net, founded in 2011, it only used 2 years to achieve positive cash flow, realized profits in 2015, and succeeded in IPO in 2017.

Different from most

Continuous financing and burning money, according to Crunchbase, Stitch Fix only received a total of 42 million 500 thousand U. S. dollars of financing;

Although the electricity business is done, 70% of the team is data technicians.

Katrina Lak, the founder of Stitch Fix, once raised a question: "how will people buy clothes after 15 years?" the answer to this question is likely to answer "what kind of subversive change will happen in the future retail form?"

In the "Online + offline" business infrastructure has been very perfect today, the retail competition is no longer limited to the commodity itself, we think, first of all, data and technology must be able to give the traditional retail, and in addition, "goods + services" will be bound in a very long period of time, the latter will be constantly enlarged.

At least at this stage, this is a "small and beautiful" track, but in essence, subscribers in addition to a new commodity sales scenes and channels, but also to provide a service: to minimize the "pre purchase" learning and search costs.

The Stitch Fix of successful IPO and the "small data" mode it represents.

With regard to "subscribing to the electricity supplier", we first make a simple definition, which is similar to the subscription of magazines. Once paid, service and goods delivery will be completed in cycles and times. In the specific delivery process, users do not need to choose goods, but the service providers complete the process according to user data, which is equivalent to "blind box".

A brief introduction to the service mode of Stitch Fix: the team, in the form of "stylist + data", matches the personalized boxes according to the user's preferences and body sign questionnaires, and charges according to the standard of 20 US dollars. If a customer buys a single item from the box, the cost of the $20 will be deducted from the bill. If the customer does not buy anything, he will eventually return all 5 pieces of the product to the usual charge.

According to public information, the subscription service of Stitch Fix has attracted nearly 2 million 200 thousand active customers, with a net income of $977 million. These revenues mainly come from the "sales fee" of clothing sales and can also be understood as the service charge.

It needs to be pointed out that although data recommendation is based on data, the data driver driven by Stitch Fix is not the same as Taobao's "guess you like", which is related to the positioning of the two.

Whether online or offline, large retail players are playing the role of traffic owner / two landlord, that is, to integrate user traffic to different businesses and brands.

As mentioned earlier

It represents a kind of optimization of search traffic.

"To serve a group of people, such as people who like casual style, may also buy other products, to help people find their products.

The subscribing electricity supplier emphasizes the service for individuals, and realizes the "goods looking for people" with the help of "small data".

That is to say, it really generates data around the preferences of individuals, involving qualitative and quantitative data, and the connection between the two. For example, Stitch Fix has set up millions of data reference points to complete this point. In the Stitch Fix's own blog, the team has carried out a detailed explanation.

In online retailing, the service logic of some buyer shops is the same, so it can get high dynamic sales rate, user retention and repeat purchase.

Algorithm process recommended by Stitch Fix

In addition to Stitch Fix, Trunk Club (Menswear), Dollar Shave Club (men's shaving products subscription), BarkBox (pet products) and so on are also subscription mode providers, of which Dollar Shave Club was acquired by Unilever for $1 billion in July 2016.

The story of Stitch Fix is naturally inspiring, so there are also a series of benchmarking projects in China.

Chui Yi: a subscribing electricity supplier cut from men's clothing, and completed the A round of financing at the end of 2017.

Soda modeling / Abox one box / delivery: the three began to go on line in the second half of 2017. As for the clothes, the Stitch and Fix were completely matched.

Fawn forest: subscribers to the vertical field of children's clothing.

MollyBox: a subscription box for cats. Each box contains 1 self selected cat food and 9 "blind box" products, including toys, snacks, canned goods, daily necessities, and the combination of periodic consumption items and non-standard products.

Less & More:Less&More is a new player. Its core business is menswear formal dress customization.

Another form of "strict selection" is essentially a Costco.

Changing the payment link, providing a new scenario of "experiential shopping" experience consumption is something that the subscribers will mention. But I would like to start with the character of "individuation".

Push products are based on personal preferences and data, and the brands and products that users come to are "personalized" enough.

Individuation is embodied in the result that service providers provide extremely limited SKU and reduce the cost of consumer selection.

Based on the above two points, the consumer end is embodied as a targeted shopping behavior.

The future brands must be personalized, from the public to the small ones. Correspondingly, the users will be more dispersed.

For a single brand, the traffic funnel of the integrated e-commerce platform is becoming narrower and narrower. The size and width of the traffic entrance are not important. The accuracy and effectiveness of the traffic are fundamental. The key to the clothing subscription service is "personalization", that is, when the number of subscribers is large enough, the subscribers can become the way to test the scene of the new products.

The personalized and exclusive commodity brands and the strict selection mode reduce the cost of user selection. These two points are very hard for people to not think of Costco.

The profit point of Costco is also composed of two aspects: "membership fee + product profit". Because Costco's product is a low margin route, most of its revenue comes from membership fees.

Costco can get "service" with low gross profit products. This service is the "strict selection" of goods: Costco has more than 3500 SKU, in contrast, WAL-MART and Target have more than 14000 SKU, and Amazon's SKU exceeds 12 million.

Referring to Stitch Fix, its main revenue comes from the "modeling fee". In fact, it is also a "strict selection", which directly helps users make product filtering besides search and recommendation.

Stitch Fix selects logic through algorithm.

Besides the services on the selected products, the exclusivity of commodities is also very important. Retailers need some kinds of products to cultivate user loyalty, which can be acquired through contract buying with manufacturers or by developing their own brands.

The size of traffic is not important. Education is also a typical product plus service track. Some non exam oriented training takes the marketing driven route. They attach great importance to the renewal rate and word-of-mouth conversion rate. After all, these two figures reflect the effectiveness of early market input.

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Membership is another key word to subscribe to the electricity supplier.

Under the background of more and more expensive traffic and higher passenger costs, the form of membership service will be diluted by the cost of the single passenger service in the following service, high threshold, but also high retention.

Subscribers are playing the role of a retailer.

The essence of retail is to earn the money of commodity circulation efficiency, reduce the sales cost of unit price through large-scale procurement, and achieve more efficient trading and circulation by reducing the cost of sales link.

On the basis of data, we should operate in directional purchase and stock mode, reduce inventory and achieve high dynamic sales.

Based on data, it has the advantage of making its own brand, gaining more Maori space, and interacting with users at regular intervals and higher frequencies.

This is actually what "new retail" has been emphasizing: the first half is about traffic and the second half is about efficiency.

At the end of the brand, this kind of instant feedback, even based on data, can be feedback to the production improvement of selected products and proprietary brands.

Katrina Lak, the founder of Stitch FIx, once found an example in public reports that the team found that women were wearing a cardigan in a low - sense office 365 days all the year through data, based on which the cardigan team considered a potential branch of sufficient potential, and indeed a good market feedback.

Efficiency is also reflected at the end of the user experience.

Whether online or offline, product shelves are limited, that is, the number of goods that consumers can see in unit time is fixed.

From banner display to thousands of thousands of faces recommendation, these are all designed to enable consumers to find products that they can buy in the fastest time, or conversely, to display products that they may buy in the shortest time in front of them.

At the front-end time, my colleagues and I, as C users, have experienced some clothing subscription box services. Our needs can be divided into two categories:

I know what I need and what I like, but I don't have much time to shop or bother to pick.

If you want to try new styles, you need to recommend some brands or single products in your "blind spot" through these platforms.

Compared with the first kind of service appeal, the second category of "discovery" needs more difficulty.

The prospect is beautiful, but the road is long.

After experiencing several clothing subscription boxes, I did not buy with my colleagues.

Push products don't like it.

As a relatively rational consumer, the price of the brand / product in the box is low.

Although it does not represent all consumers, it can reflect the problems that may be faced in the subscription box field:

New forms of service can always attract a large number of users in the initial stage, but when the service is difficult to achieve, these users will quickly lose.

When the quality of service is uncertain, membership fees or a single service charge will become a sunk cost.

My understanding is that there are two points behind it, namely, algorithmic technology and supply chain.

The former is more like the problem of "laying hens or laying hens", that is, how to achieve the accuracy of product push in the case of insufficient data volume. Under normal circumstances, the solution is to recommend buyers in the early stage, and ensure the quality of service in a relatively heavy form.

"Buying with me every day" is a recent WeChat contact business applet that I have recently contacted, providing one-stop "low price search + order placing" service for the members. Jiang Zhixi, founder, told reporters that in addition to helping members find the products they need to buy at the lowest price link in the whole network, they bought support recommendations such as "face cream" and "earphone" every day, and the accuracy of recommendation was based on the accumulation of user data, and these data also came from the participation and buying behavior in the WeChat community before users were converted into paid members.

Less&More represents another possibility for data collection.

In the report on online male garment customization research, we have made a prediction: Based on multi-dimensional user data and user value considerations, bidding for Stitch Fix will definitely be the direction that online menswear customized players will try in the future.

The Less&More team also launched a subscription box service early this year to give priority to.

Of course, just as Stitch Fix is actually a data technology company (team 70% is a technical team), only data is obviously not enough. Stitch FIx hired a former WAL-MART official website CEO Mike Smith as chief operating officer and Eric Smith, the data scientist behind Netflix as chief algorithm officer.

Category is also crucial.

A big logic is that when a brand is highly dispersed in a market and the user's buying behavior presents a distinct cyclical feature, this category is suitable for subscription, such as clothing, men's razors and flowers.

Therefore, consumables and labels must be "subscribed", such as napkins, milk and so on.

One of the services I buy from me every day is the periodic reminder of the purchase of consumables, and the daily brand brand concept has joined similar services in its own product design.

For non-standard clothing, the clothes are cut from men's clothing, the fawn forest chooses children's clothing, Less&More recommends the bottoming sweater, and in fact, it chooses the relative standard of non-standard.

In general, even though there are already listed cases, subscription providers are still in a relatively early stage of development, and the reason why we discuss the subscription business is because we have seen some visible changes in the consumer side and the brand side. On the one hand, personalized demand is constantly mentioned, corresponding to the emergence of emerging brands. On the other hand, as channels, consumers and media are extremely structured, the brand of visualization will not exist again, and the deeper segmentation and inclusive brand will become the mainstream.

In addition to the "new play", subscription providers also represent an upgrade from commodity standard to consumer value, which is worth noting in the progress of commercial society.

More interesting reports, please pay attention to the world clothing shoes and hats net.