Business News: Peloton will invest $100 million to counter delays in delivery.
Peloton has seen a surge in popularity over the past year, as the pandemic has forced people to give up on the gym and train at home. Unfortunately, the company struggled to meet the sudden influx of demand, and huge delivery delays mean customers have to wait longer than usual for their bikes and treadmills. Now, in a post on the company’s website, Peloton co-founder and CEO John Foley has detailed how the exercise equipment manufacturer plans to address the problem.
For starters, Peloton is spending $ 100 million to ship Bike and Tread machines from overseas production facilities via air freight and expedited shipping in the first half of the year.
Foley says it’s ten times the normal cost of transportation and delivery per bike and tread, but the company is making the investment “to make all of its customers good.” The CEO also said Peloton has six times the production capacity compared to last year, but the company plans to further expand manufacturing in the United States in the coming quarters.
As you may recall, the company acquired fitness equipment maker Precor for $ 420 million late last year. This gives the company access to Precor’s manufacturing space in North Carolina and Washington, which will ultimately be used to make Peloton products. Production in the United States would also solve another problem Foley mentioned in his post, namely congestion at the ports in Los Angeles and Long Beach, which caused a delay for all goods entering the United States. “Bicycles, Peloton’s shoes and accessories were held multiple times at the port five times longer than normal, “he wrote.
According to the Wall Street Journal, Peloton’s sales more than doubled in its most recent earnings period, while subscriptions to its online training classes grew 134%. As a result, the company made a profit for the third consecutive quarter, with a net profit of $ 63.6 million.
However, many customers who have purchased Peloton products since last year have experienced longer delivery times and some have even picked up their shipments on the day their equipment is due to arrive. Some customers have been given new delivery dates that are still months away. WSJ has also seen cases where people have been funding Peloton equipment for months but have not yet received the order. It remains to be seen whether the significant investment in air cargo and the other steps Peloton is taking will be enough to solve the delivery problems.