"The Geek's Guide to Merchandising, Warehousing & Operating," Stitch Fix >> Mike Smith [COMMERCISM...

COMMERCISM March 21, 2014

The Geek’s Guide to Merchandising, Warehousing and OperaAng

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“There is a tectonic shift going on in an industry (retail) that represents a large chunk of GDP and I’m not sure the industry knows how deep or fast it’s going to be” – a recent entrepreneur

Most companies at this conference will FAIL to capitalize on the tectonic shifts because they won’t truly differentiate

Introduc)on

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Agenda

Overview of Stitch Fix (very quick) Tactics for success Real life examples of using data with high impact What I wish I knew?

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S)tch Fix brings scalable personaliza)on to the mass market

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Proprietary tools blend the science of data with the art of styling to achieve a truly personalized customer experience

•  Leverage structured data •  Simultaneously weight many

features

•  Leverage the unstructured data (e.g. pinterest, images, video, etc.)

•  Foster relaAonships (notes, explanaAon, style Aps, etc.)

Styling Algorithm Stylists

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Agenda


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Four recommended tactics for success

•  Invest in data science

•  Recruit a data science leader that works well with functional leaders in business

•  Ensure that metrics coming from data science are true and meaningful levers for driving business impact

•  Develop an approach for HOW TO DO IT – the “It” being making data a differentiator

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Tactic 1: Invest in data science

Investing in data science is not just investing in “analytical” people – it requires understanding the art & science mix

Find the Eigen value Which image has a dog?

Impact of tactic: Higher AOV

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Four critical rules to follow when hiring a great data science leader…

•  Candidates can’t operate in a box

•  Should not have a big ego

•  Should be a great communicator

•  Data science should report directly to founder / CEO

Tactic 2: Recruit a great data science leader

Impact of tactic: data science becomes an extension of business functions enabling greater accountability on P&L levers

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Too many data points DON’T drive impact – focus on those that do!

Tac)c 3: Ensure data drives real business impact

Impact of tactic: better contribution margin and LTV

How much inventory has been stolen by employees? How do we get the bottom five customer service agents to go from 8 emails per hour to 10 emails per hour?

Data can help answer these questions, but they are low impact

Data should be leveraged to answer questions with high business impact

Are there high LTV “Romantic” customers that have a lower quality fix score? What is the true “quality” of the inventory relative to our current client mix? Do we have enough medium “Classic” dresses in inventory?

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How do you do it if you don’t have the leader of algorithms for Google, Pandora, Amazon or Netflix?

How do you know what questions to ask?

Tactic 4: Develop an approach for HOW TO DO IT

Impact of tactic: data that we collect and use drives improvement in our business

Key challenges for startups… …are addressed

with the following approach

Start with end in mind

•  What do you think the drivers of performance?

•  What are the key metrics?

Truly put yourself in the customer’s shoes

•  How do you shop?

•  What are the most important things to you?

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Agenda


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Real life example: Merchandising / inventory management

~30 questions that provide value to both the customer and to us really help us manage capital efficiently

Sample range of annualized inventory turns

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Real life example: Opera)ons Strategic handling of returns or restocked items

The Old World: no organization or ability to prioritize returns

The New World: bags prioritized by impact on inventory

High priority returns –

processed first

Low priority returns –

processed last

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Agenda


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What I wish I knew … three key things

•  For now, we don’t see value in measurements

•  This business is very capital intensive

•  Data can really risk reduce the “art” side of retail

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"The Geek's Guide to Merchandising, Warehousing & Operating," Stitch Fix >> Mike Smith [COMMERCISM...

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Transcript of "The Geek's Guide to Merchandising, Warehousing & Operating," Stitch Fix >> Mike Smith [COMMERCISM...