Apparel and accessories are the third fastest-growing product category we measure, growing 3.9% to reach $616.37 billion in U.S. sales this year, but retailers remain sensitive to price. Being sensitive, you need to find creative ways to engage your consumers.
Reseller thredUP uses AI to build on its success in order growth (6% year-over-year growth) and revenue (12% year-over-year) in fiscal 2023. Meanwhile, Stitch Fix is changing its media mix to limit an 18% year-over-year revenue decline in Q2 2024 and a 17% year-over-year decline in active client numbers.
Bringing AI to retail: thredUP recently rolled out a new AI-powered search feature on its site, allowing consumers to search not just by item, but also by trends, occasions, or phrases. For example, users can type in “Sunday brunch dress” or “Oscar chic” to find entire outfits that match their query.
- “By combining visual language and personal style, this new search feature greatly enhances the shopping experience and allows shoppers to easily curate style inspiration,” said CEO and Co-Founder of thredUP. said James Reinhart during the company's earnings call this week.
- The company says early results show increased searches per session, increased add-to-cart conversions from searches, and improved click-through rates for individual product pages.
Reinhart said the company plans to launch an AI tool that will allow users to create costumes using only text descriptions.
- “for example, [a shopper] I'm looking for an outfit to wear to a fancy luau on my upcoming trip to Hawaii.By using natural language prompts, our generative AI tools [can create] The outfit consists of a floral crop top and a flowing white maxi skirt with side slits. [and pair it] Wear embellished sandals. ”
- The applications for this tool are endless, Reinhardt said. Users can recreate trending outfits from popular magazines, influencers, or runways.
This is especially useful for thredUP, where products are sold second-hand and therefore lack product images, including models.
“We believe generative AI technology will disproportionately benefit marketplaces like thredUP compared to other apparel and peer-to-peer marketplaces,” Reinhart said.
Under the hood, AI helps thredUP generate product descriptions and features from product images.
- “This functionality not only enriches our inventory database, but also streamlines product classification and processing,” said Reinhart. “This has increased the accuracy of our product listings, resulting in better market search and personalization.”
- In the near term, thredUP sees potential in generative AI's ability to improve visual merchandising and create more engaging content for shoppers.
- Reinhardt believes generative AI could not only complement manual photography, but also replace it.
Mix: Meanwhile, Stitch Fix is adjusting its marketing mix to boost declining revenues.
The company focused on top- and mid-funnel strategies to increase brand affinity and increase traffic. From now on, Stitch Fix will incorporate the entire marketing funnel. ”[ing] “We have improved our media mix and spend levels to improve customer conversion and retention,” CEO Matt Baer said on the company's earnings call.
Baer declined to provide details on the adjustments, but said video is and will continue to be an important element. “We currently do well with video in terms of storytelling that highlights the unique differentiators of our business model and how we can uniquely serve our customers compared to other retail options at their disposal.” I’m working,” he said. He said.
CFO David Aufderhar said Stitch Fix is focused on targeting consumers who are more likely to become high-value lifetime customers. Not only did active users decline in the second quarter, but net revenue per active client also fell by 3% year-over-year. Stitch Fix has struggled with subscription fatigue, increased competition and challenges with stylists, including laying off his 1,400 people in California in 2020.
Our work is not just about acquiring customers. Stitch Fix is also enhancing the shopping experience to increase satisfaction and customer retention.
- Baer said the company plans to introduce a new onboarding experience in the coming months that features a more “dynamic and interactive” way for customers to begin their relationship with the brand.
- Stitch Fix offers more ways for stylists and shoppers to connect directly, which should help the company create more personalized relationships with customers.
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