Peloton To Sell Gear And Apparel Via Amazon As CEO Retools Strategy

CTN NEWS –   Peloton Interactive rallied after agreeing to offer bikes and accessories on Amazon.com as part of a turnaround plan, breaking with a longtime practice of selling products through its own channels.

Amazon’s vast online marketplace will help Peloton expand distribution and make products more accessible, the company said in a statement Wednesday. Websites and retail showrooms have been its only outlets.

Peloton shares jumped 20% to $13.48 in New York, their biggest one-day rise in over six months. This year, the stock lost more than two-thirds of its value as a result of slowing demand, inventory building, and strategy changes.

A deal between Amazon and Peloton had been discussed earlier this year, and investors pressed for it. But Peloton Chief Executive Officer Barry McCarthy has said that he’s not trying to sell the company.

Peloton’s retail partnership with Amazon.com

Peloton’s retail partnership with Amazon.com in the US broadens its reach, though we don’t think of this as a precursor to M&A, said Geetha Ranganathan, a Bloomberg Intelligence senior media analyst.

The pact should help boost Peloton’s top line, but — more importantly — trim distribution costs and help it turn free cash flow positive in fiscal 2023.

McCarthy, a tech veteran who took the helm in February, is trying to turn around a business that thrived during the early days of the pandemic but slowed drastically in the past year.

He’s looking to reinvigorate sales, boost efficiency and restore some of Peloton’s former cachet. Amazon provides Peloton with another way to work down its inventory pile-up, which it amassed as pandemic lockdowns faded.

McCarthy’s general strategy is to rely more on partners to operate the business — a push that’s furthered by the Amazon arrangement.

New York-based fitness company announced plans

The New York-based fitness company announced plans earlier this month to lay off about 800 workers, raise the prices of its equipment, and outsource deliveries and some customer service functions. Next year, it plans to reduce its North American retail footprint.

It’s not hard to see why Peloton chose to sell its wares on Amazon. The Seattle-based company has a commanding position in online retail in the US.

Insider Intelligence estimates Amazon will account for 38% of US retail e-commerce sales this year, with Walmart Inc. a distant second at about 6%.

Expanding our distribution channels through Amazon is a natural extension of our business and an organic way to increase access to our brand, Kevin Cornils, Peloton’s chief commercial officer, said in the statement.

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