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Venture Capital

What Could Hamper Stitch Fix’s Growth

For clothing shoppers looking for some fresh ideas, Stitch Fix’s personalized e-commerce service is a great option. But for investors looking for fresh ideas in e-commerce, Stitch Fix may be one to avoid.

New data on credit card transactions suggest the novelty of its service wears off quickly. Customers who stay for two years spend half as much in the second as the first, the data show. To bring in new customers and remind old ones to buy again, Stitch Fix has increased ad spending to 10% of revenue in the first quarter of this fiscal year from 3% in 2016. But newer customers spend less than existing ones, according to the data, from research firm Second Measure. 

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The data “suggest there has been some deterioration of the quality of these customers.”