Too Busy to Shop? Le Tote, Stitch Fix Help Fill Out Your Wardrobe

Xconomy San Francisco — 

Shopping for new clothes is still a pain, even with all the online options out there. Paging through a whole bunch of websites isn’t a quick process, and with the exception of online chatting, there aren’t sales people to talk about fit, putting outfits together, and what might work best for particular body types.

Two San Francisco-based startups, Le Tote and Stitch Fix, aim to fix that problem.

Le Tote sees itself as the “Netflix of fashion,” sending its subscribers a box of clothes and accessories that they can wear as long as they’d like. When they’ve gotten tired of them, they send them back, and get a new shipment in the mail.

According to Le Tote president Brett Northart, the company solves a problem that has gotten worse as images have exploded on social media: people don’t want to meet their friends in the same clothes they’ve worn over and over, but with services like Instagram, friends see each other’s outfits even when they’re not hanging out. “You go out to happy hour tonight, you can’t wear that top tomorrow,” he says. “All your friends and co-workers are on social media.”

The inspiration for Le Tote came from two places. Co-founder and CEO Rakesh Tondon’s wife had been pregnant twice, and both times wanted more variety in her wardrobe, but didn’t want to pay for clothes she could only wear for a couple of months.

Around the same time, Northart’s girlfriend and her friends had put together a clothing share that they tracked on a spreadsheet. The two co-founders, who had both worked in finance in the Bay Area, saw an opportunity to build the same idea on a bigger scale. “It was a really elegant solution, but it was occurring in these hyperlocal, offline groups,” Northart says. “We decided to take the idea and make a big national shared closet.”

In their research, they also discovered that women buy four times as many items of clothing as they did in 1980, and that they only wear 15 percent of the clothes in their closets. “A lot of women we talked to said they would buy a piece and wear it a couple of times, then relegate it to the back of the closet,” Northart says. “Pieces weren’t getting worn until they fell apart, unlike the way I wear clothing—until it’s fraying on the ends.”

For expertise, Tondon and Northart turned to a friend who was a buyer at Macy’s, and then started sending clothes out to friends to see if they enjoyed the experience.

Two years later, the company has grown to 25 employees, and raised $2.4 million from investors including Andreessen Horowitz, Google Ventures, angel investors, and others. (It does not release subscription numbers.)

Here’s how it works: Subscribers go to Le Tote, add items to their “virtual closets”, and fill out their profiles. Le Tote’s algorithms then pick out items for each customer based on those two factors, and the company mails out the clothes.

Le Tote also asks for copious feedback, so that as users rate the items they’ve received, the company can learn about not only what styles they like, but also what kind of fit they like. Some people of the same height or bust size might disagree about how short or tight their clothes should be. “We’ll see this person is more classic than she is trendy, so if it’s more aggressive on the cut, it’s not going to work for her,” Northart says. Over time, he says, Le Tote gets smarter and smarter about sending you things you like to wear.

Instead of just sending requested sizes, Le Tote also analyzes its data to determine whether a customer should size up or down. “If 75 percent of people with your silhouette haven’t fit their typical size, we need to give you a bigger or smaller size to make it fit better,” Northart says.

Le Tote subscribers pay $49 per month to receive five pieces of clothing and accessories that can be exchanged as often as they like. It’s a similar model to other subscription services like Birchbox, which mails out boxes of beauty and grooming samples. For now, the company is only targeting women, but it may add other demographics in the future.

Though Le Tote is solely focused on its current revenue model, with all the fit and sizing data it’s collecting, it’s not hard to imagine a business-to-business product aimed at online retail stores down the line.

Stitch Fix has a different model, providing busy women with a stylist who can help them pick out new clothes. The idea came to founder Katrina Lake when she was getting her MBA at Harvard Business School. “I have been that profile of that time-starved woman who has that really demanding job and wants a personal life and wants to look cute at brunch or work,” Lake says.

To make sure women get the styles and kinds of clothes that they want, Stitch Fix asks for hyper-detailed information about things like age, weight, bra size, shirt size versus pants size, and how fitted users like their clothing to be. Then users scroll through clothing collections, rating how much they like them, and fill out information about how often they go to events like cocktail parties and weddings versus work events, how much they like to spend on particular items of clothing, and even whether they prefer gold or silver jewelry.

Stitch Fix’s algorithms take that data and come up with options for individual users. “Behind the scenes, we use a lot of data analytics and algorithms to help us buy the right product and get it to the right person,” Lake says. “It took us a couple of years to have enough data to understand our customer well enough.”

Three years after the company was founded, Stitch Fix has a lot of data to work with.

However, the company’s 300-plus human stylists make the ultimate decisions on what is sent to each customer. Users can also make notes about, say, upcoming trips or events they need clothes for (or in my case, a hunt for a new pair of jeans—see below).

Then they pay $20 to Stitch Fix as a styling fee. If shoppers decide to keep any of the items, that $20 is applied towards their purchase. Stitch Fix is like any other retail company, so it purchases clothes at wholesale and profits on the margins. Each box, or “fix,” comes with five new options.

Though Stitch Fix has a new style of retail model, the company’s biggest hurdle is the same as that of Macy’s or Nordstrom or any other retailer (in addition to name recognition). “The biggest challenge is that this is an inventory-intensive business,” Lake says. “You have to be really careful. When you sign up, we need to have five relevant things to ship you. That’s very difficult.”

However, Lake notes, Stitch Fix does have an advantage over a Nordstrom or a Macy’s. The startup’s layers of data understand the customer in a way that a brick and mortar store just can’t.

Over the past three years, Stitch Fix has raised $16.75 million from investors including Benchmark and Lightspeed Venture Partners, and has sent out hundreds of thousands of fixes.

In the name of research, I went through the process with both companies. With Stitch Fix I specifically requested a pair of jeans, which are notoriously hard to shop for. When it arrived, the fix contained a floral print tank, an awesome cowl-neck zip-up cardigan, the jeans, a bracelet and a print dress.

My stylist did a great job finding things that I really would wear, and brands that I wouldn’t normally think to look for. And I was really impressed by the jeans she selected. As a discovery engine, it was incredibly helpful. Though a $20 styling fee isn’t something I would want to pay for regularly, for hard-to-find items it wouldn’t be a bad thing. Plus, if I had purchased the clothes, the $20 would have helped pay for them.

Le Tote also came up with some cool options, including a bracelet I’m sorry to have to give back. The three tops they sent—two tanks and a shirt—were definitely wearable, but less my style, possibly because the company asks fewer questions than StitchFix—or because it was my first time ordering and they didn’t have a lot of data on me yet.

Ultimately, though, I could see the utility in both. It’s just a question of whether you’re willing to pay a convenience fee. And both companies are finding that a lot of women are.