The co-founder and CEO of indoor cycling brand Peloton says a cheaper version of its exercise bike, which retails for $2,245 in the US, is on its way with the company looking to target the mass market. In an interview with Time magazine, John Foley also discussed the positive impact of COVID-19 on the business, and gave his reaction to the fallout from the notorious ‘Peloton Wife’ advert.
Founded in 2012, Peloton was listed on the NASDAQ exchange last year and saws sales top half a billion dollars in the first three months of 2020, with growth due in large part to people ordering its exercise bike as lockdown restrictions came into force.
The New York City-based company now has some 2.6 million members worldwide, but Foley believes there is potential to expand that to 200 million people over the next 15 years.
That could translate into big bucks given Peloton’s business model – besides the hardware it sells in the form of its bikes and treadmills, it also provides media content in the form of the classes it streams to subscribers around the world from its studios in New York and London.
And while fitness equipment accounted for 61 per cent of first-quarter sales, subscription revenues are growing quickly, nearly doubling year-on-year to just under $100 million, and will become an increasingly important income stream in the years ahead, with the company also aiming to grow through targeting new markets.
“We’re selling a lot of bikes in the last eight weeks to people that hadn’t been considering buying a Peloton product in the past,” explained Foley, who said that introducing a 90-day free trial of its online classes at the start of the crisis, replacing the previous 30-day one “was such a quick, easy, obvious” step to take.
Some 1.2 million people take advantage of the trial during the first 45 days it was in operation, and Foley said: “We want to make our products even more affordable than they are today.
“Right now our bike is just over $2,000. But it’s $58 a month [for a 39-month, interest-free loan that covers the cost of the bike]. $58 a month [divided] by two people who are going to use it.
“Maybe even three people in your home. If we can get those monthly payments down, we can really open it up. And we want everyone in every socio-economic class to be able to afford Peloton. That’s a big focus for us in the coming years.”
Foley said that part of the reason for Peloton’s surging sales is the enforced closure of gyms in the company’s core US market due to lockdown legislation.
He believes that even once restrictions are lifted, this will hasten the decline of an already struggling sector, and that Peloton can also benefit from increasing numbers of people working from home once the crisis has passed.
“I don’t think people are going to rush back to crowded gyms,” he said. “I just don’t see that happening. Especially people who experience Peloton, and why it’s a better experience at a better location with a bigger community, with better instructors, for better value.
“There will be gyms and will be boutique fitness operators. I just think it’s going to be a massively contracting category. The gym model was challenged yesterday. And I think it will be even more challenged tomorrow.
“And then the other thing; for some roles, and some functions in some companies, you’re seeing that working from home can be pretty efficient.”
While it has been online sales that have fuelled Peloton’s recent growth, with its 100 or so stores around the world closed, Foley also believes there will be an opportunity to grow its physical presence.
“I am really excited about the opportunity that is going to present itself with some retailers struggling and Peloton being able to pick up more premium retail locations,” he said. “We’re going to be investing and making those special locations.”
He also spoke about last year’s infamous ‘Peloton Wife’ Christmas advert which received a lot of backlash on social media due to perceptions it was sexist and reinforced gender stereotypes.
“It has been a rollercoaster,” he said. “It’s been emotional for me because we do think we’re building something special. We do think we’re making people’s lives better.
“And when people criticise us and make fun of us, it gets to me, to be totally honest. I’ve developed thick skin, but it’s a little bit of a head scratcher.
“I had seen the commercial, and we struggled with telling the story of how special what happens on the Peloton platform is. It’s about those endorphins and being your best self and looking forward to waking up and looking forward to getting on the bike and getting off the bike and feeling stronger and more supported and more motivated. And a better dad or a better mom or a better professional.
“As marketers, we tried to kind of get into that a little bit with that spot. But the world didn’t want to hear it.
“The world, unfortunately, or some people – cynics – the cynical blogosphere at least – still sees fitness equipment as rote weight loss. It was unfortunate because that’s never been part of our brand.
“And it was really thrown in our face when – we call it adgate – when adgate happened,” he added. “It really was unfortunate because what is happening at Peloton really is a beautiful special thing. When you’re not in it, you don’t appreciate it.”
Simon has been news editor at road.cc since 2009, reporting on 10 editions and counting of pro cycling’s biggest races such as the Tour de France, stories on issues including infrastructure and campaigning, and interviewing some of the biggest names in cycling. A law and languages graduate, published translator and former retail analyst, his background has proved invaluable in reporting on issues as diverse as cycling-related court cases, anti-doping investigations, and the bike industry. He splits his time between London and Cambridge, and loves taking his miniature schnauzer Elodie on adventures in the basket of her Elephant Bike.