Data-Driven Ecommerce is the Future: Meet the Rising Stars that are Already There

Posted by Ivan Mazour 17 Jun 14

A few days ago, one of my favourite companies, a company that few people have heard of, announced yet another huge funding round. The company is called Stitch Fix, it is an ecommerce business, and it was founded just three years ago. Their current annualised run rate is $150m.

What makes it such as an amazing company, is that Stitch Fix was founded based on a simple vision - that data-driven ecommerce will prevail above all others. This is a vision that we at Ometria share, and it has been incredible to watch Stitch Fix scale so impressively quickly. The premise of what they do is simple - they collect a number of data points about each customer, they use algorithms to work out what those people are most likely to want, they send them five items, and they hope that none get returned for a refund. Based on their growth and investment, it appears the model has been proven. Those items aren't being returned.

People love to shop. But they love to shop because they can go and get things they like. Things that make them happy. Nobody enjoys going shopping and not being able to afford to buy something, or not finding whatever it was they're looking for. The actual experience of shopping is only pleasant if it ends with the desired result. 

Retailers love to sell things. They love to sell the right item to the right customer, and to have that customer leave the shop happy, spreading the word to everyone they know. Retail is, in theoretical principle, simple. It's about selling the right thing to the right person, for a profit. So why is it so hard? Why are the people running ecommerce businesses some of the busiest and most stressed-out people I've come across?

Well it's not easy to find out what the right thing is. Or who the right person is. Or how to find either of them, put them together, and make sure that the transaction that results is actually a profitable one. Entire teams are built in order to get to this information, and to fight the constant battle to stop it all from breaking down. Finding all this out, identifying it, acting on it - these are obstacles that are merely in the way of what retailers and consumers really want to do. To sell, and to buy. 


Stitch Fix is a clear example of the power of data in giving consumers what they want. They don't leave anything up to chance. Instead, they learn everything they need to about the customer, and they make sure that the products those customers are presented with are the exact ones that they want. According to their statistics, 70 per cent of all of their customers repurchase within three months. I haven't come across a single other company coming close to this.

So how do other retailers compete? Does this mean that all of the existing retail operations are destined to fail, leaving a brand new generation of data-focused ecommerce businesses to take over the market?


A long time ago, businesses realised that email was the best channel for marketing to customers. Getting an existing customer to purchase again costs significantly less than acquiring a new one from scratch. So they needed to send emails, and lots of them. No doubt in the early days people tried to do this directly. Using Outlook. And no doubt this took dozens of hours, and led to many mistakes. But it was clear that without email marketing, an ecommerce business simply couldn't be competitive. So retailers outsourced the sending of emails to technology platforms - ESPs like MailChimp. And suddenly the complexities were all taken away, and instead they could focus on what they enjoyed doing - the creative work, the messaging, and the general content that would delight their customers and get them to come back and purchase again.

Today, retailers are realising that being data-driven is vital for success. And they are still in that early stage. They are still trying to work it out themselves. They are still using Outlook (well Google Analytics and Excel, but the analogy stands). But imagine if, just like with email technology, it was possible to delegate out all of the complexity - aggregating the data, making sure it is accurate, working out which aspects of it are important, working out which actions should be taken and when. Imagine if instead retailers could focus only on the actions that truly needed their attention - the actions that would make the biggest impact on their business. 

This is the future. Retailers who were set up in the pre data-driven era are not destined to fade into obscurity. Technology will come to the rescue. They will plug in an ecommerce intelligence solution, and they will all be like Stitch Fix - using data, and making sure they are always selling the right products to the right customers. This is our vision for the future of ecommerce. We're proud to be leading the way.

Will you join us?

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Topics: Ecommerce news

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