In order to win back investors and broaden its customer base, Peloton has struck a partnership with Amazon.
In its first venture outside of its core direct-to-consumer business, Peloton will be selling a selection of its connected-fitness equipment and accessories on Amazon.
The original bike retails for over $1,000. The strength product will cost $295. The more expensive Bike+ and Tread treadmill machines were not included in the tie up.
The stock was up 8% before the market opened.
According to Kevin Cornils, there are about half a million searches on Amazon every month for Peloton's products.
Cornils said in a phone interview that the retail environment is evolving and that they are trying to understand better to make sure the Peloton of the future is right.
He said they wanted to make it easy to get a Peloton.
The partnership with another retailer will be the first of its kind. The company has relied on websites and showrooms to sell directly to consumers. Under the leadership of CEO Barry McCarthy, the business has committed to widening its distribution and lowering customer acquisition costs.
Costs spiraled out of control and losses mounted when the company's founder, John Foley, stepped down from the CEO role in February. Another way to drum up sales is by testing a subscription model. The company exited all of its in-house manufacturing.
More layoffs, store closings, about-face price hikes and exiting the last-mile delivery business were announced earlier this month.
The share price of Peloton has plummeted. Its market cap was as high as $50 billion early in the year.
McCarthy is not afraid to take risks to get the business back on track. McCarthy has said that the goal of Peloton is to have 100 million members. The company had 7 million members at the end of its most recent quarter.
The Bike and Guide, as well as a selection of accessories, will be sold on Amazon. There is an assortment of branded apparel, including sports bras, leggings, shorts, tank tops, hats and jogger pants.
Cornils said that this was a good start for the company.
It is possible that Peloton will change its assortment on Amazon as it learns what people want. He said it was possible that Peloton would look to other retailers for similar deals.
It would make sense for Amazon and Peloton to offer live and on-demand workout content to Prime customers. Cornils wasn't sure if this was a possibility.
Analysts think that the company is considering ways to broaden the distribution of its content under McCarthy.
The self-assembly option will be available to shoppers who buy a bike from the Amazon site. People who prefer expert assembly will be able to do so.
Cornils said it will be a learning experience for the company to see how people respond to self-assembly. It is another way that the company can cut costs.
According to the company, Amazon's customer service team will provide support for product purchases, delivery, installation and returns.
Cornils said that physical retail is an important part of their strategy. We are trying to match the consumer, that's what this is about.
The fiscal fourth-quarter results are expected to be reported before the market opens on Thursday. The company is expected to report a loss of 72 cents per share on revenue of $718.19 million.
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