Peloton has partnered with Amazon in a bid to expand its customer base and regain investor confidence as revenue growth slows from pandemic highs and its stock price plunges.
In its first foray outside of its core direct-to-consumer business, Peloton will sell a selection of its connected fitness equipment and accessories on Amazon’s US website starting Wednesday.
This will include his original bike, which retails for $1,445. He will also sell his strength product known as Peloton Guide, which costs $295. Excluded from the reconciliation are its more expensive Bike+ and Tread treadmills.
Peloton’s stock rebounded more than 18% in early trading.
Peloton’s chief commercial officer, Kevin Cornils, said there were already around 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 better understand to ensure the peloton of the future is appropriately calibrated for it. “Cornils said into a phone. interview.
“We want to make it as easy as possible to get a Platoon,” 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 is committed to expanding distribution globally and cutting customer acquisition costs to return the company to profitability.
Peloton embarked on an $800 million restructuring plan when company founder John Foley stepped down as CEO in February as costs spiraled out of control and losses mounted. Since then, it has been testing a subscription model for its equipment, as another way to increase sales. Peloton also exited all of its in-house manufacturing to simplify its supply chain.
Earlier this month, the company announced additional cost-cutting measures, including more layoffs, store closures, about-face price hikes and exiting the last-mile delivery business.
Peloton’s share price is down about 70% year-to-date, as of Tuesday’s market close. Its market cap has fallen to around $3.7 billion from $50 billion at the start of 2021.
The move to Amazon indicates that McCarthy, formerly of Netflix and Spotify, isn’t afraid to take risks to get the company back on a stronger footing. McCarthy also said Peloton’s goal is to one day have 100 million members, a goal Foley set in 2020. Peloton ended its last quarter with about 7 million members.
testing the waters
In addition to the bike and guide, Peloton will sell a selection of accessories on Amazon, including its branded cycling shoes, bike mat, weights, yoga blocks, water bottle and heart rate armband. . Shoppers will also see an assortment of her signature apparel, including sports bras, leggings, shorts, tank tops, hats and sweatpants.
“It’s a really good start for us, with a digital retailer, to test the waters,” Cornils explained.
Over time, Peloton may adjust its assortment on Amazon as it learns what people are looking for, he said. It’s also possible that Peloton will look to other retailers for similar deals to expand its reach, he added.
It might also be a good idea for Amazon and Peloton to consider making live, on-demand workout content from the fitness company another perk for paying Amazon Prime customers. Cornils did not confirm if 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.
Buyers who purchase a Peloton bike from the Amazon site will be able to select a self-assembly option rather than schedule time with a professional to assemble it. The expert assembly option will be available for those who would prefer it.
Cornils said it would be a learning experience for the company to see what customers prefer and how they react to a self-assembly option. It’s not something Peloton has offered before, but it’s another way the company is cutting costs.
Peloton’s support team will handle ongoing customer service inquiries related to repairs, maintenance requests, subscriptions and general inquiries, according to the company, while Amazon’s customer service team will provide assistance. for purchases, delivery, installation and product returns.
“Physical retail will always be an important part of our strategy,” Cornils said. “It’s more a reflection of our attempt to match the consumer.”
Peloton is expected to release its fiscal fourth quarter results before market open Thursday. Analysts expect the company to post a loss per share of 72 cents on revenue of $718.19 million, according to Refinitiv consensus.