After a third round of layoffs, Peloton is now looking at redesigning its bikes so that users can assemble them independently. CEO Barry McCarthy is also considering a plan that would let Peloton App customers potentially watch workouts on third-party workout machines. McCarthy told bloomberg That Peloton has been working on a redesign of the bike “for a while” and to top it all off, he said he hopes Peloton’s long-awaited rover could debut sometime this holiday season. . He also confirmed that the company has not completely abandoned Trade Plus.
It all tracks with McCarthy’s comments during the company’s Q3 2022 earnings in May. At the time, he considered potentially changing hardware designs so that future Peloton equipment could be designed to be delivered to a customer’s home in one piece. Right now, Peloton’s treadmills and bikes require white-glove delivery in separate pieces, with a crew that comes to your house and builds yours for you. The service used to be free, but Peloton began charging an additional $250-$350 in late January.
The move is part of Peloton’s ongoing restructuring plan, which aims to reduce the company’s costs and improve cash flow. On Friday, Peloton announced it was cutting more than 500 jobs related to last-mile delivery and product delivery. The company also noted that it was increasing the cost of its Bike Plus and Tread, closing retail locations in 2023. To make it so that customers can assemble their equipment, it would mean that the company could only ship devices through FedEx – something that rowing rival Hydro recently implemented with its slimmer, smaller Hydro Wave rover. .
Since taking over in February, McCarthy hasn’t shy away from sharing novel ideas on how to turn the peloton’s flailing financial fortunes around. Money saved from Friday’s cost-cutting measures will reportedly be funneled back into Peloton’s R&D as well as marketing efforts. This includes marketing Peloton’s standalone app, which McCarthy identified as historically receiving little or no publicity. This coincides with the other plans mentioned by the CEO bloomberg, which includes potentially allowing Peloton users to stream classes on third-party workout machines. McCarthy also noted that the company may be turning the app’s subscription strategy toward a “freemium” model, where some features aren’t locked behind a paywall.
This strategy is the same as what Apple currently does for its Fitness Plus service, which doesn’t require the use of an Apple-branded exercise machine. Instead, people can use their own equipment to stream Fitness Plus classes using rowers, treadmills and bikes at their local gyms. The main difference is that Apple still requires users to have at least an Apple Watch and iPhone in order to use Fitness Plus.
But while McCarthy is keen to move to services, it looks like hardware still has a role to play in Peloton’s business. For example, the company is preparing to launch a rover, potentially this holiday season. The rover at Connected Fitness was probably the worst-kept secret until it was confirmed at Peloton’s annual Homecoming event for customers earlier this year.
More surprisingly, McCarthy indicated that the company was looking forward to relaunching the Trade Plus, which was recalled last year after multiple injuries and the death of a young child. While both its Tread and Trade Plus machines were recalled, the Tread was later approved for sale in late 2021. However, Trade Plus is out of circulation. In Q3, the company also noted that high-end treadmill returns were higher than anticipated, costing the company $18 million. According to McCarthy, the relaunch of Trade Plus is entirely dependent on the government getting it approved for sale. It’s possible that Peloton hasn’t given up hope on Trade Plus, but it’s not something it’s banking on. On Friday, part of the rationale for the $800 increase in the price of the “affordable” trade was to position it as a better tool and promote Peloton’s “premium” image.
Another interesting point is that Peloton is preparing to expand its One Peloton Club leasing pilot. The program adds the cost of the bike and classes together for an $89 monthly fee. The pilot has been a success for the company so far, with McCarthy saying in May that the program had “mass market appeal” because 53 percent of signups came from households earning less than $100,000.
Peloton is expected to hold its Q4 2022 earnings call later this month on August 25th, and we’ll find out more about which plans will stick with that then. So far, Peloton’s restructuring efforts have got off to a slow start, and Wall Street investors have been skeptical overall.