Peloton looks to get back in shape by selling on Amazon
Peloton, which seemingly overnight went from boom to bust, last week reached a deal to sell through Amazon.com’s U.S. website, marking its first wholesale selling relationship.
Previously, Peloton’s products were only sold on its own website and high-touch showrooms.
“U.S. Amazon has become the default first-stop shopping destination for hundreds of millions of customers worldwide,” said CEO Barry McCarthy last week in Peloton’s fourth-quarter shareholder’s letter. “Our Peloton store on amazon.com will bring a selection of our products closer to the Amazon’s U.S. customer base and allow us to directly act on fitness-related shopping queries occurring on Amazon every week.”
Customers can search Amazon’s website to see if Peloton products are available in their area with delivery fulfilled by Amazon. For the first time, Peloton is offering a self-assembly option.
Items available include the Original Peloton Bike ($1,445) and Guide Strength Training Device ($295) as well as apparel, shoes, weights and other accessories. Peloton will not sell its higher-priced Bike+ and Tread online because they cannot yet be self-installed.
More retail partnerships are expected to be announced soon.
Peloton’s sales surged so much amid the pandemic lockdowns that customers canceled orders due to month-long waits. As gyms reopened, Peloton’s sales crashed and losses swelled. Peloton’s market capitalization has shrunk to $3.2 billion from as high as $50 billion in early 2021.
Mr. McCarthy, who in February replaced John Foley, Peloton’s founder and CEO, has largely focused on cost-cutting, including layoffs and outsourcing production and delivery, to realign expenses with reduced sales expectations.
To revive top-line growth, Mr. McCarthy, a former Spotify and Netflix executive, has particularly talked up growing subscriptions to take advantage of Peloton’s workout content, perhaps significantly reducing hardware prices and hiking subscription rates. Peloton also may sell pre-owned bikes and is testing rentals (e.g., $60-$100 monthly fee for Bike rental plus classes).
Asked about the potential for Peloton’s retail entry, Mr. McCarthy said, “We have modest assumptions in our forecast related to the impact for that business. I hope there’s tremendous upside. But we won’t know till we know.”
- Peloton Launches Products, Apparel And Accessories In Amazon’s U.S. Stores – Peloton
- 4Q 2022 Shareholder Letter – Peloton
- Peloton Interactive (PTON) Q4 2022 Earnings Call Transcript – The Motley Fool
- Peloton will sell fitness equipment and apparel on Amazon – The New York Times
- Why Peloton Is Selling on Amazon – The New York Times
- Peloton’s New C.E.O. on the Tough Road Ahead – The New York Times
DISCUSSION QUESTIONS: Do you see more of an upside or downside to Peloton’s deal to sell on Amazon and possibly with other retailers? Would the selling relationships make more sense should Peloton shift to a subscription-first strategy and further lower its bike and treadmill prices?