Peleton Needs More Partnerships and Collaborations To Reach New Markets

On Monday, October 3rd, Peloton signed a deal with Hilton to put 5,400 Hilton-branded bikes into all 18 of Hilton’s subsidiaries. This deal is important for Peloton moving forward since we are now out of lockdown and returning to the real world, which means fewer people need to be working out at home and more people are returning to their local gyms.

Now, we are able to access these large gyms that tend to be cheaper and more versatile than home gyms. For example, Planet Fitness is one of the largest gym chains in the world and offers a range of prices that are surprisingly cheap. Gym membership is $10 and their PB Black Card—which gives you access to over 2,300 locations—is $25. In addition, high school students could go to the gym for free over the summer. Each of these chain-styled gyms offers all kinds of useful amenities and gives access to all kinds of machinery and equipment.

While amazing services like Planet Fitness are all over the world, people are still going to want to work out from home. Some people prefer to work out at home since they might find feel more comfortable there than working out at a big gym—new post-lockdown normality—or they might find it easier. While the lockdown is over, people are also still working from home: from 2019 and 2021, the number of people primarily working from home tripled from 5.7% (roughly 9 million people) to 17.9% (27.6 million people), according to the new 2021 American Community Survey (ACS). This change occurred because companies could experiment with a home-office style workflow during the lockdown and found it was efficient, allowing them to reduce spending on office space. In addition, there is a rise in online education for all high schools and universities. According to ThinkImpact, 75% of schools offered a full online experience in 2021 and many of the schools continue to offer this option because it is cheaper and more accessible than formal in-person education. All of the virtual workflow and education expanded Peleton’s market area and they maintained that market area after the shutdown, but now, most people are returning to work and realizing that they do not need to work out at home. Now, Peleton faces challenges since its products are not as useful for customers as they used to be.

Peloton’s biking product is an expensive experience. Many customers buy the bike (a more than $1,400 bike) and some pay the subscription ($12.99 a month) to bike through nature or do real-time workouts with professional cyclist instructors all from their homes. Now, most people cannot afford the expensive bike as well as the monthly subscription since prices are rising. Some customers may not like the product because it's not very easy to transport and it's not versatile—again it's only a bike. With fewer people needing the bikes during the lockdown, customers were selling them all over the internet. Less people now need to use the product and even fewer people need the subscription. All of these shifting factors leave Peleton in a volatile state. On top of that, cheaper and more versatile home gym equipment is coming into the market, attempting to eat away at Peleton’s now smaller market. Customers are looking for the best product for their money, especially with higher prices than ever before with inflation and fuel prices. For example, Tonal recently launched an advertising campaign with Lebron James for their more than $3,000 wall-mounted gym. Although its doubles the price of a Peleton, it is far more versatile and can even change its intensity and pull to fit your strength, while catering to your growth.

Although Peloton is the biggest in the modern home gym biking market and they have one of the highest quality home-biking experiences, its products could lose out to competition or their weakened post-lockdown market. Peloton needs a cushion and needs to ensure its profitability. They need to expand to new markets beyond the home gym—it is hotels, big gyms like Planet Fitness, or futuristic office buildings. They are starting to diversify their product line with rowing machines and treadmills, but that market is even more competitive for those products. Peloton has its biggest lead in the indoor biking experience, but pushing its whole product line with a high-quality experience toward new markets will secure its company’s future.