On Wednesday, Peloton announced it would start selling its entry-level bike on Amazon. At first, that seems like quite a change for the company known for selling its luxury fitness equipment directly to consumers through its website and flagship boutiques. It’s as though the company is admitting its strategy of selling directly to consumers has failed.
There’s definitely some truth to that. More specifically, it’s an admission that there are only so many people in the market for a $1500 to $2500 stationary bike. That number, it turns out, is a lot smaller than Peloton thought it was.
Peloton has been trying hard to turn its business around. The company’s founder stepped down as CEO and was replaced by Barry McCarthy, who previously served as CFO at Netflix and Spotify. It also said it would outsource the production of its equipment, raise prices, and focus more on its subscription business. It also plans to shut down a number of its physical retail stores and lay off more than 700 employees.
The thing is, none of those moves necessarily help it solve the biggest problem it faces, which is that it’s losing massive amounts of money ($1.2 billion in the last quarter) because it has a lot of inventory it can’t sell. Of course, the reason it couldn’t sell them is that by late last year people started doing things like going to the gym, or the movies, or, you know, outside. That meant they weren’t in the market for expensive fitness equipment for their homes.
On the other hand, if there was ever a way to reach people who would never visit one of Peloton’s stores or its website, it’s Amazon. “We want to meet consumers where they are, and they are shopping on Amazon,” said Kevin Cornils, Peloton’s chief commercial officer.
That means that all of those $1,500 bikes filling up Peloton’s warehouse will now be sitting in Amazon’s warehouses. That’s a far better situation for a lot of reasons, not the least of which is that if there’s anything Amazon is good at, it’s finding people to buy things.
More important, however, is that Amazon will help Peloton find new and different customers. Those customers care about different things, which is why I love this simple detail about Peloton’s deal with Amazon.
If you go to the Amazon page to order a Peloton, there’s an option to assemble it yourself, or — for no additional charge — to have it assembled professionally. That doesn’t seem like a big deal until you think about who is likely to buy a Peloton on Amazon instead of all of the other options available — most of which sell at a far less expensive price point.
The reason people shop on Amazon is for convenience. Even if the price of something isn’t necessarily cheaper, it’s far easier to simply tap or click to buy something and have it delivered to your house in a day or two than it is to get in the car and walk through a store to find the same product.
You’re not necessarily looking for a full-service experience. You don’t expect white-glove treatment. You expect to order some cat food and the next day a guy shows up in a blue van and leaves a box on your doorstep.
The thing is, if you’re ordering a large piece of exercise hardware, it’s not as simple as leaving a box on your doorstep. At some point, you have to open that box and put all the parts together. That simple option on the website seems like such a great value. You might think, “I can pay for this bike, and you’ll come help me put it together for free? Wow, what a great deal!”
Of course, Peloton has always offered delivery and assembly service through its own network of couriers. The price for delivery has been built into the price. If you’re the type of person inclined to search out Peloton’s website and place an order, you already know that. If you’re shopping for exercise equipment on Amazon, you probably don’t.
But, what you do know is that having someone set it up for you seems like a great deal, and makes the whole idea of spending that kind of money on a Peloton a little easier. It’s actually a very simple principle that applies to every business: Make it easy for your customers to give you money.
That means, as Peloton says, meeting them where they are. It means making the experience as convenient as possible. It might just seems like a simple option on a website, but in reality, Peloton figured out a way to offer the same level of service it has before, but in a way that exceeds the expectations of someone shopping on Amazon.
All of this might seem silly, but in reality, Peloton has to attract more value-conscious customers if it’s going to survive. Otherwise, its only option is to find a company with enough money that is willing to just buy the whole business. A company like Amazon, perhaps?