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Business Models Business Operations

How Does Stitch Fix Make Money (Business and Revenue Model)

The Stitch Fix business model

Stitch Fix logo
Here’s what you should know:
  • What is Stitch Fix, and how does Stitch Fix work?
  • How does Stitch Fix make money?
  • Selling Merchandise
  • Styling Fees (Fix Offering)
  • Style Passes (Freestyle Offering)
  • Selling Gift Cards
  • Stitch Fix subsidiaries, acquisitions, and exits
  • Stitch Fix profit and revenue
  • What is the Stitch Fix business and revenue model?
  • Stitch Fix funding, net worth, and market cap

How does Stitch Fix make money? Well, here is a full, in depth, breakdown of their four (4) revenue streams and the different products and services they offer, as well as the Stitch Fix business and revenue model, how much money Stitch Fix makes per year, and how Stitch Fix works.

What is Stitch Fix, and how does Stitch Fix work?

Stitch Fix is an online personal styling service that sends customers personalized clothing items based on recommendation algorithms and data science based on a client’s size, budget, and style.

Founded in 2011 by Katrina Lake, Stitch Fix began trading on the NASDAQ on November 17, 2017, under the ticker symbol “SFIX”.

Since that time, Stitch Fix now has more than 4.1 million customers using their personalized styling services to shop with them.

So, how does Stitch Fix work? To shop on Stitch Fix, you can start by downloading their app from the Apple App Store or Google Play store; or visiting their website and creating an account.

After you’re signed up, you will fill out Stitch Fix’s ‘Style Quiz’ which will tell your Stylist more about you, your style, size, fit preferences, and price range. Once that’s done, you pay an upfront $20 styling fee which gets credited toward the pieces you decide to keep.

Stitch Fix will send you 5 handpicked clothing items based on the style profile you filled out prior. You can then can ship back any items you don’t like (free return shipping) and only pay for what you keep.

Some of Stitch Fix’s competitors include The RealReal, ASOS, SHEIN, ThredUP, Rent the Runway, FashionNova, and other online retailers.

Stitch Fix App in Apple App Store | Stitch Fix Business Model | How Does Stitch Fix Make Money? | How Does Stitch Fix Work?
Source: Apple App Store | Stitch Fix

How does Stitch Fix make money?

According to Stitch Fix, Stitch Fix has more than 4.1 million customers using their personalized styling services to style them. So how does Stitch Fix make money off of all these customers?

Below is a breakdown of how much money Stitch Fix makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 4 ways how Stitch Fix makes money in 2022

Stitch Fix has a revenue model that makes money in four (4) ways; from selling merchandise, styling fees, style passes, and gift cards.

#1. Styling Fees (Fix Offering)

Before purchasing any merchandise, Stitch Fix customers must first choose between two (2) offerings; Fix and Freestyle.

With Stitch Fix’s Fix offering, they charge clients a nonrefundable upfront $20 fee, referred to as a “styling fee,” which gets credited towards any merchandise the client keeps when Stitch Fix sends it.

This style fee acts like a service fee. It’s a way to bind that the customer and Stitch Fix are now in business together until the customer decides to keep the clothing or return it.

To our knowledge and research, a customer cannot purchase any clothing without first paying this $20 nonrefundable upfront fee, also known as a “service fee”, to receive their personalized items to choose from. If this is inaccurate, please contact us and we will correct it.

How much does Stitch Fix cost? (Stitch Fix styling fee)

  • $20 styling fee per Fix
Stitch Fix logo hero image | Stitch Fix Business Model | How Does Stitch Fix Make Money? | How Does Stitch Fix Work?
Source: Stitch Fix

Note: No subscription is required Styling fees are charged per ‘Fix’. Fixes are nonrefundable.

#2. Selling Merchandise

After customers, or “clients”, fill out their style profile and pay their $20 nonrefundable styling fee, Stitch Fix sends customers 5 handpicked clothing items to choose from.

From which – they can then ship back any items they don’t like and are charged for the pieces they keep. This is where Stitch Fix makes the bulk of its money – selling merchandise.

Stitch Fix’s men’s and women’s clothing items range in price from $25 to $500, while their kid’s line starts at $10 each.

Stitch Fix clothes | Stitch Fix Business Model | How Does Stitch Fix Make Money? | How Does Stitch Fix Work?
Source: Stitch Fix

Note: Customers must first pay the styling fee first before receiving or buying merchandise.

#3. Style Passes (Freestyle Offering)

Alternatively, clients can choose to purchase Style Passes instead of paying Styling Fees, although this offering is currently only available to select U.S. clients as an invite-only.

Style Pass clients pay a nonrefundable $49 annual fee for unlimited stylings instead of paying a $20 styling fee for each Fix. Which also gets credited towards any merchandise purchases.

  • Style Passes are $49 per year

Note: Style Passes are currently only available to select U.S. clients as an invite-only.

#4. Selling Gift Cards

Lastly, although it’s a small revenue stream. Stitch Fix also recognizes revenue and makes money from its sale of gift cards. Which customers can purchase in values between $20 to $1,000.

Stitch Fix subsidiaries, acquisitions, and exits

To date, Stitch Fix has made a total of 1 acquisition.

Mergers and acquisitions business model
Source: Crunchbase | Stitch Fix

Stitch Fix profit and revenue

In 2021, Stitch Fix reported $2.1 billion USD in revenue.

Note: Because Stitch Fix, Inc. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Stitch Fix’s publicly released financial reports, including annual reports, through Stitch Fix’s investor section on their website.

What is the Stitch Fix business and revenue model?

Stitch Fix makes money through a few revenue models that they combine within their company, they are:

  • Fee for service (FFS) business model
  • Transaction based business model
  • Business to business (B2B) business model
  • B2B2C (partnerships) business model
  • Mergers and acquisitions (M&A) business model

Stitch Fix funding, net worth, and market cap

According to Stitch Fix’s Crunchbase profile, Stitch Fix has raised $79.4 million over 5 rounds and has a market cap of $796.1 million as of August 2022.