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Peloton will spend $100 million to address delivery delays

Mariella Moon
·Associate Editor
·2-min read

Peloton enjoyed a surge in popularity over the past year as the pandemic forced people to give up gyms and to exercise in their homes. Unfortunately, the company is struggling to meet the sudden influx of demand, and massive delivery delays mean customers are stuck waiting for their bikes and treadmills longer than usual. Now, in a post on the company’s website, Peloton co-founder and CEO John Foley detailed how the exercise equipment maker plans to address the issue. To start with, Peloton is spending $100 million to move its Bike and Tread machines from overseas manufacturing facilities by air and expedited ocean freight in the first half of the year.

Foley says that’s ten times the usual transportation and delivery cost per Bike and Tread, but the company is making the investment “to do right by all” of its customers. The CEO also said that Peloton has six times more manufacturing capacity than it did last year, but it’s looking to expand its US-based manufacturing efforts even further in the coming quarters.

If you’ll recall, the company acquired fitness equipment maker Precor late last year for $420 million. That will give it access to Precor’s manufacturing space in North Carolina and Washington, which will eventually be used to make Peloton’s products. Manufacturing in the US would also solve another problem Foley has mentioned in his post, namely port congestion in Los Angeles and Long Beach, which has been causing a delay for all goods coming into the US. “Peloton Bikes, Treads, and accessories have been held at Port for upwards of five times longer than usual,” 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 workout classes grew by 134 percent. As a result, it turned a profit for the third quarter in a row, reporting a net income of $63.6 million. A lot of customers who purchased Peloton products since last year experienced longer delivery times, though, and some even got their shipment pushed back on the day their equipment was supposed to arrive. Some customers got new delivery dates that are months away. WSJ also found instances wherein people have been financing a Peloton equipment for months but have yet to get their order. It remains to be seen whether the sizable investment into air freight and the other steps Peloton is taking are enough to solve its fulfillment woes.