Peloton Interactive Inc. on a stationary bike at the company’s showroom in Dedham, Massachusetts, US. Logo Wednesday February 3, 2021.
Adam Glanzman | Bloomberg | Getty Images
With revenue growth slowing from the pandemic and stock prices plummeting, Peloton partnered with Amazon to expand its customer base and restore investor confidence.
In its first foray outside of its core direct-to-consumer business, Peloton will list its connected fitness equipment and accessories on Amazon’s website in the US starting Wednesday.
That includes the original bike, which retails for $1,445. It also sells its own fitness product known as the Peloton Guide, which costs $295. Excluded from jail are the more expensive Bike+ and Tread treadmills.
Peloton shares rose 15% in premarket trading.
Peloton’s chief commercial officer, Kevin Cornells, was not available on the site before Wednesday, but there are about half a million searches for Peloton products on Amazon each month.
“Post-Covid, the retail environment — online and in stores — continues to evolve, and that’s something we’re trying to better understand to make sure Peloton is properly prepared for that going forward,” Cornells said by phone. Interview
“We want to make it as easy as possible to find the peloton,” he added.
This marks Peloton’s first partnership with another retailer to sell its merchandise. Until now, the company has relied on its website and physical showrooms to sell directly to consumers. But under CEO Barry McCarthy, who took over in February, Peloton is determined to expand its distribution globally and cut customer acquisition costs in a bid to return the business to profitability.
When company founder John Foley stepped down as CEO in February, Peloton announced an $800 million restructuring plan. Since then, it has been experimenting with a subscription model for the device, as another way to drum up sales. Peloton has outsourced all manufacturing in-house to simplify its supply chain.
Earlier this month, the company announced more cost-cutting measures, including more layoffs, store closures, upfront price increases and a last-mile delivery business.
Peloton’s stock price is down nearly 70%. The market size has fallen to $3.7 billion from $50 billion in early 2021.
The move to Amazon shows that McCarthy, formerly of Netflix and Spotify, isn’t afraid to take risks to get the business back on a solid footing. McCarthy also added that Peloton’s goal is to one day count 100 million members, a goal Foley set for 2020.
Testing the water
In addition to bikes and guides, Peloton sells a range of accessories on Amazon, including branded cycling shoes, cycling mats, weights, yoga blocks, water bottles and heart rate arms. Shoppers will see a variety of the brand’s popular apparel, including sportswear, footwear, shorts, tank tops, hoodies and jogger pants.
“This is a great start for us to test the waters with a digital retailer,” Cornills explained.
As Peloton learns what people want over time, it’s possible to adjust the gap on Amazon, he said. Peloton may also look to other retailers for similar deals to extend its reach, he added.
It might also make sense for Amazon and Peloton to consider making the fitness company’s live and on-demand workout content another perk for paying Amazon Prime customers. Cornell did not confirm that this was possible.
Analysts have speculated that Peloton is considering ways to expand its content under McCarthy’s content and subscription mastermind.
Consumers purchasing a Peloton bike from Amazon’s site can choose the self-assembly option instead of having to spend time with a professional to put it together. A selection of experts is available to those who choose.
Cornells said it will be a learning experience for the company to see what customers prefer and how they respond to the self-collection option. This isn’t something Peloton has offered before, but it’s another way for the company to cut costs.
Peloton’s support team manages ongoing customer service inquiries related to repairs, maintenance requests, subscriptions and general inquiries, according to the company, while Amazon’s customer service team provides support for product purchases, delivery, shipping and returns.
“Physical retail will always be an important part of our strategy,” Cornells said. “That’s more a reflection of how we’re trying to relate to the consumer.”
Peloton is set to report its fiscal fourth-quarter results before the market opens Thursday. Analysts were expecting the company to post a loss of 72 cents on revenue of $718.19 million, according to the Refinitiv deal.