Following its Q2 Fiscal 2021 earnings webcast, Peloton released a message to customers via its company blog. Cofounder and CEO John Foley opened up about the logistical challenges Peloton deliveries faced in 2020 due to increased demand and COVID-19.
Peloton’s CEO apologized to current customers who have seen multiple delays or reschedules in their Peloton deliveries the past year. He also relayed a feeling of empathy for Peloton customers. The blog statement states that the fitness giant increased its manufacturing capabilities by 6x the past 12 months. However, that growth it does not solve the issue of delayed deliveries. Peloton’s Bike and Tread machines are currently manufactured overseas in Taiwan.
To combat congested ports and impeded deliveries, Peloton is investing over $100 million to help expedite the movement of Bikes and Treads globally. The CEO confided that Peloton will be incurring transportation costs that are over 10 times the usual cost per unit. This is due in large part by shipping via air instead of sea.
Foley went on to explain the reasoning behind the (expensive) decision:
We are making this investment because we are as frustrated as you are that you don’t have your Peloton Bike or Tread yet. We are (and always have been) a company that is deeply committed to your happiness and we’ve fallen short of that in this regard. Please know we’re working hard and spending aggressively to do right by all of you.
Peloton is sacrificing funds to keep its customers happy
The decision to use planes to deliver components is of course only temporary. With that said, it should certainly help expedite both the assembly and delivery processes. Foley also revealed that in the future, Peloton plans to expand its manufacturing operations stateside. That would certainly help shorten its supply chain and maximize efficiency.
This public statement isn’t going to suddenly deliver your Peloton to your doorstep tomorrow. However, it is a thoughtful gesture that exhibits the company’s emphasis on customer experience. We will now have to keep a close eye on the global deliveries and see how quickly things speed up.