When Peloton announced Bike+ a few weeks ago, many customers were faced with a dilemma. Those who were still waiting on delivery of their original Bike as well as those still within the 30-day Peloton return window had to decide which Bike to choose.
For customers who wanted to upgrade, they had to wait through lengthy customer service wait times, long delivery times, and multiple trips for delivery and pickups. If you spend any time on the Peloton Reddit community, you’ll see a lot of varied experiences depending on whether XPO did deliveries or if Peloton was the one delivering. This frustration existed before the release of Bike+ and the new treadmill, and it’s just gotten worse. I could link to countless threads, but they all end the same: a lot of bad experiences trying to get the product they want to their home, in working order.
Peloton’s key problem ahead is not sales, churn, marketing, or competitors. It’s solely around logistics. Peloton is making, assembling, shipping, and delivering very large items. Most home exercise equipment comes in a box and must be assembled by the customer. Peloton is overseeing the entire process and it’s a challenging one, but it’s a key part of the overall Peloton experience.
A new bike being released during a pandemic has exacerbated the problem as well. There are likely thousands of people who want to return their original Bike for Bike+. Peloton now has to deliver the new Bike+, and then pick up the original bike (generally on a second trip). When Apple releases a new iPhone, if people want to return the one they just bought, they either return it to an Apple Store or ship it via Fedex. You can’t Fedex a Peloton Bike, and that is Peloton’s No. 1 problem at the moment.
On page 62 of Peloton’s Investor presentation, they discuss the importance of the last-mile delivery. The key factor in this slide is that they are tripling their own fleet delivery by FY23. Peloton doesn’t have to move at the speed of Amazon Prime, but improving the last-mile experience is going to be critical to improving their overall logistics operations.
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