Peloton, the interconnected exercise equipment company known mostly for its pricey bikes, is acquiring Precor, a supplier of commercial fitness equipment in a $420 million deal.
This has been a big year for home exercise equipment, and Peloton has been a winner in this pandemic — sales have doubled. But that growth has come with supply chain issues, and this deal may be the answer to Peloton’s problems.
This time last year if you were talking about Peloton, the conversation probably centered around that strange, viral ad. A woman gets a Peloton, props it up next to her living room window, sweats through a bunch of rides — and her life is changed.
But a year later, with stay-at-home orders, Peloton sales and subscriptions grew and grew, topping a million. And with that growth came supply chain pains. Some customers wound up waiting weeks for bikes.
Sridhar Tayur, an operations management professor at Carnegie Mellon University, said Peloton has a plan.
“Buying manufacturing capacity as well as kind of the supply chain that kind of goes along with it that gets manufactured products to the consumers,” Tayur said.
Faster, too because, Precor has factories in the U.S. And Tayur said this could work for Precor, too.
“They might have built a supply chain expecting a certain gym kind of demand,” Tayur said, but people aren’t exactly crowding into gyms these days.
What is crowded is the space Peloton wants to dominate. Echelon Fitness makes cheaper interconnected bikes. Apple just launched a competing fitness platform. And now lots of gyms and studios offer streaming classes.
Americus Reed, a marketing professor at the Wharton School at the University of Pennsylvania, said Peloton has to think around the next corner.
“The way to stay out in front of this is to make sure you’re in a position to deliver kind of the next add-on aspect to this,” he said.
So the bike screen now swivels, and you can hop off and take a yoga class. And with this acquisition, Peloton wants to make sure customers are getting everything they want as soon as they want it.