Peloton’s continued growth is threatened by slow delivery

Peloton’s slow delivery is beginning to anger customers as long wait times turn into competitors’ opportunities. Peloton’s struggle to continue its rapid growth is recapped in the NY Times.

Peloton’s relentlessly positive Instagram posts usually attract enthusiastic responses from its 1.2 million followers, who love the company’s charismatic instructors and its $1,900-plus bikes and treadmills.

But recently the company’s account has become a beacon for outrage about delayed deliveries and hours spent with customer service representatives. “I know a good Peloton goal…deliver my mom’s bike that was supposed to be here December 21st!” snapped one person in response to a post about New Year’s goals. “I could be close to 900 rides oh but that’s right I don’t have my bike!” another replied to a post about a user’s 900th ride.

“What we’re finding is that Peloton the idea has grown faster than Peloton the company,” said Simeon Siegel, a retail analyst at BMO Capital Markets. “All companies need to figure out how to grow into their hype. Right now, the hype surrounding Peloton is like no other.”

The entire article recaps horror stories of customers wanting weeks for their bikes only for delays to impact them days ahead of delivery. In the meantime, companies like ICON, Echelon, and Apple are moving ahead with meeting customer’s needs.

Peloton’s logistical challenges are not easy to solve. Unlike Apple, which can pack hundreds of prepackaged iPhones on a single UPS truck, a Peloton Bike must be assembled in a warehouse and loaded a delivery truck/van. Peloton is a victim of its own success as there is simply more demand for its products than it can currently meet. It’s imperative to grab each customer with a low church on fitness-related subscription hardware. Even as Peloton’s stock has boomed this past year, continued growth in 2021 is going to require operational efficiency.

Peloton is now transporting some of its bikes by plane to avoid congested ports, a move that is significantly more expensive. In late December it paid $420 million to acquire Precor, a fitness manufacturer based in the United States, which will allow Peloton to begin producing bikes stateside in the second half of the year. 

The Precor acquisition may end up being Peloton’s most important acquisition. Competitors have been quick to respond to customer social media posts letting them know they can deliver much quicker. Many of Peloton’s competitors have retail partnerships with Amazon, Walmart, and Best Buy to assist with delivery where Peloton is 100% on direct to consumer sales.

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