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Comment: Peloton’s use of music to drive sales of merchandise is going to raise ARPU

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Peloton recently kicked off season 2 of ‘Sunday’s with Love’ with Ally Love. They then released a merchandise collection with the same theme.

Ally is one of my favorite instructors, and she has an amazing story so the ‘Sunday’s with Love’ theme fits her perfectly.

What I personally find so interesting about this theme is how Peloton had merchandise almost immediately after season two kicked off. From a business perspective, one of Peloton’s goals has to be average revenue per user. The attrition rate for all access subscribers is under 1%, and I don’t see it rising much higher in the future. Likely, it’ll always remain under 10% as people want to maximize their Peloton hardware use. With the retention rate being so high, Peloton can now focus on ARPU.

Peloton’s merchandise collections are premium brands sold at premium prices, and I expect it to stay that way in the future. I could, however, see Peloton moving away from reselling other brands with Peloton branding on it, though. As they grow their merchandise division, they’ll be able to bring manufacturing in house. Earlier this year, they hired the person who ran Amazon Merch to run their e-commerce division.

What makes this entire system work so well is that it gives people something to buy to go along with their themes. If Ally’s classes have helped motivate you or resonated with you, you’ll have a way to show that support to Ally by buying the merchandise. It also gives Peloton a way to create new collections that aren’t just the typical ‘workout’ clothes, but something unique.

Yesterday, Peloton released a few ‘Grateful Dead’ themed merchandise items. I previously wrote about how Peloton’s use of music (particularly the Grateful Dead) goes much deeper than finding the right playlist.

I am very interested in seeing how Peloton continues to expand its use of music to drive other aspects of its business in the future.

By Bradley Chambers

Rides a Peloton bike all over Chattanooga, TN.

Peloton referral code: X8TK3S

Contact: bradley@9to5mac.com
Twitter: @BradleyChambers