In December 2017, Stitch Fix, the personal styling company that went public in 2017, rolled out an invite-only membership called Style Pass, offering unlimited shipments to select subscribers at a fixed price of $49 a year. Currently, the company charges a $20 styling fee per shipment that could be applied to a purchase of an item. On earnings calls, SFIX executives have referred to a “disciplined approach” on multiple occasions when discussing their selection strategy for this new subscription rollout.
To better understand which customers Stitch Fix targeted for their Style Pass rollout, we identified Style Pass members in our data from millions of de-identified U.S. consumers and analyzed their spending behavior prior to subscribing.
Key Takeaways
- Style Pass members converted – purchased something from their fix – 84% of the time, ~10% higher than non-Style Pass members. They also purchased clothing at higher transaction amounts by as much as 15%.
- Style Pass members tend to spend more across all other apparel brands; ~7% more than a non-Style Pass member and ~15% more than the average non-Stitch Fix shopper.
- Style Pass annual retention rates are between 50% and 70%, with earlier cohorts renewing at 65%+ and later cohorts renewing at under 60%.
More Clothing, More Money
Style Pass members converted – bought an item from their box – 84% of the time over the last four years, 10% higher than non-Style Pass members who converted 74% of the time over the same period.
Additionally, Style Pass members had higher average transaction amounts than non-Style Pass members, at times by as much as ~15%.
Finally, higher conversion rates and higher transaction amounts have resulted in a slightly disproportionate amount of total spend considering their size; for example, they make up 19% of total unique shoppers but have generated 25% of total panel sales in the last quarter.
Apparel Spending at a Premium
Style Pass members don’t just spend more at Stitch Fix; they appear to spend more across all apparel brands. Over the past four years, the average transaction size of a Style Pass member in the apparel vertical was ~7% higher than a non-Style Pass member and ~15% higher than the average non-Stitch Fix shopper.
This dynamic holds true when looking further at individual merchants with relatively few exceptions (DXLG, OXM, FINL, JCG, UAA).
Style Pass Retention Rates
During the Q3 2019 Earnings call, management commented that “[Style Pass] 1-year renewal rates have exceeded 70%,” but they did not provide an updated figure on the most recent Q4 2019 call. We cohorted Style Pass members by the month they first subscribed and analyzed the retention rates for each cohort accordingly.
Generally speaking, we see retention rates for all cohorts falling between 50% and 70%; admittedly none exceeding 70%. The earlier cohorts (Jan, Feb, and Mar 2018) have seen 65%+ retention rates, while some later cohorts (May, July, and Sept 2018) have seen retention rates fall below 60%.
Notes
Style Pass Member: We defined Style Pass members as shoppers that made a $49 transaction at Stitch Fix on or after January 2018 and subsequently ceased to make a $20 payment.
Converted Fix: A purchase made by a Stitch Fix customer within 30 days following a fix at a transaction amount not equal to $20. Earnest cannot identify conversion rates for existing Style Pass members as, by definition, they would no longer be checking out $20 fixes. Additionally, with the introduction of the Direct-Buy functionality, it may prove difficult to measure conversion rates going forward as users would no longer have to check out a fix in order to purchase something.
