Peloton sells fitness equipment, clothing on Amazon
A Peloton Interactive Inc. logo on a stationary bike at the company’s showroom in Dedham, Massachusetts, U.S., Wednesday, Feb. 3, 2021.
Adam Glanzman | Bloomberg | Getty Images
Peloton has partnered with Amazon in a bid to expand its customer base and win back investor confidence as revenue growth slows from pandemic peaks and its stock price plummets.
In its first foray outside of its core direct-to-consumer business, Peloton will sell a range of its connected fitness equipment and accessories on Amazon̵[ads1]7;s US site starting Wednesday
That will include the original bike, which retails for $1,445. It will also sell its strength product known as the Peloton Guide, which costs $295. Excluded from the tie-up are its more expensive Bike+ and Tread treadmills.
Peloton’s stock rose about 8% in premarket trading.
Peloton’s chief commercial officer Kevin Cornils said there are already about half a million searches on Amazon each month for Peloton’s products, despite its lack of a presence on the site before Wednesday.
“Post-Covid, the retail environment — online and in-store — continues to evolve, and that’s something we’re trying to understand better to make sure the Peloton of the future is properly calibrated for it,” Cornils said in a phone interview.
“We want to make it as easy as possible to get a Peloton,” he added.
This will mark Peloton’s first partnership with another retailer to sell its merchandise. Until now, the company has relied on its website and physical showrooms, selling directly to consumers. But under CEO Barry McCarthy, who took over in February, Peloton has committed to expanding distribution globally and reducing customer acquisition costs to return the business to profitability.
Peloton embarked on an $800 million restructuring plan when the company’s founder, John Foley, stepped down as CEO in February as costs spiraled and losses mounted. It has since tested a subscription model for its equipment as another way to boost sales. Peloton also abandoned all of its own production to simplify its supply chain.
Earlier this month, the company announced additional cost-cutting measures, including more layoffs, store closures, price increases and ending its last-mile delivery business.
Peloton’s share price is down approx. 70% so far this year. Its market cap has fallen to around $3.7 billion, from as high as $50 billion in early 2021.
The move to Amazon signals that McCarthy, formerly of Netflix and Spotify, is not afraid to take risks to get the business back on a stronger footing. McCarthy has also said that Peloton’s goal is to one day have 100 million members, a goal that Foley set for 2020. Peloton ended its most recent quarter with about 7 million members.
Test the water
In addition to the bike and guide, Peloton will sell a selection of accessories on Amazon, including cycling shoes, cycling mat, weights, yoga blocks, water bottle and heart rate bracelet. Shoppers will also see a selection of the brand’s apparel, including sports bras, leggings, shorts, tank tops, hats and sweatpants.
“This is a very good start for us, with a digital retailer, to test the waters,” explained Cornils.
Over time, it’s possible Peloton will adjust its assortment on Amazon as it learns what people are looking for, he said. It’s also possible Peloton will look to other retailers for similar deals to expand its reach, he added.
It might also make sense for Amazon and Peloton to consider turning the fitness company’s live and on-demand training content into another benefit for paying Amazon Prime customers. Cornils did not confirm whether this was a possibility.
Analysts have speculated that Peloton is considering ways to expand distribution of its content under McCarthy, a content and subscription guru.
Customers who purchase a Peloton bike from the Amazon site will be able to choose a self-assembly option instead of scheduling time with a professional to put it together. The expert fitting option will be available for people who prefer it.
Cornils said it will be a learning experience for the company to see what customers prefer and how they respond to a self-assembly option. This isn’t something Peloton has offered before, but it’s another way the company can cut costs.
Peloton’s support team will manage ongoing customer service requests related to repairs, maintenance requests, subscriptions and general inquiries, according to the company, while Amazon’s customer service team will provide support for product purchase, delivery, installation and returns.
“Physical retail will always be an important part of our strategy,” Cornils said. “This is more a reflection of us trying to match the consumer.”
Peloton is set to report its fourth-quarter financial results before the market opens on Thursday. Analysts expect the company to post a loss per share of 72 cents on revenue of $718.19 million, according to the Refinitiv consensus.
