Peloton will stop building treadmills and bikes in-house to reduce costs

Image: Peloton

The Taiwanese manufacturer Rexon will be the sole supplier of bikes and treadmills for the company. Out-sourced building will allow the company to reduce costs and simplify its supply chain.

Barry McCarthy is the new CEO and he is trying to right the ship. The company is focused on delivering home workouts. As the company was left with too much inventory, sales, subscribers, and stock plummeted. The most recent earnings showed a loss.

McCarthy has laid out a number of strategies to revive the business, including out-sourced manufacturing. Instead of focusing on the hardware-plus-subscriptions model, the company will put more resources behind its software and marketing.

Some treadmills and bikes were built by Tonic Fitness Technology after it was acquired by Peloton in 2019. Plans for a factory in Ohio were later canceled.

Andrew Rendich, the company's chief supply chain officer, said that operations at the facility would be suspended through the rest of the year. It makes it possible to ramp up and down based on demand. Unwanted inventory has been a problem for the company.

McCarthy said in the press release that the move was another significant step in simplification of the supply chain.