Peloton SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats of Peloton

Peloton SWOT Analysis

Peloton is a leading exercise equipment company with the largest interactive fitness platform that has a loyal community base of more than 3 million users and platforms in the world. The company is the pioneer of connected programs that are technology-enabled. It undertakes the streaming of immersive boutique classes that are instructor-led which can be accessed from anywhere on the globe at the convenience of the users.

With the guidance of instructors, customers are taken through a variety of fitness and wellness disciplines that include indoor/outdoor cycling, walking, running, yoga, Bootcamp, meditation, strength training, and stretching, among others. The brand’s main products include stationary bikes and treadmills with monthly subscriptions by customers from all over the globe that enables customers to access the streamed classes from the brand’s studio.

SWOT analysis is a critical but simple strategic tool for positioning businesses competitively in the market place. The tool equips brands with pertinent insights with regards to their strengths, weaknesses, opportunities, and threats so that businesses operate at their optimal in the marketplace.

Peloton – At a Glance

NamePeloton Interactive, Inc.
Websiteonepeloton.com
FoundersGraham Stanton, Hisao Kushi, John Foley, Tom Cortese
Yony Feng
Chief Executive Officer (C.E.O.)John Foley, 
HeadquartersNew York City, New York, U.S.
Type of CorporationPublic company
Year FoundedJanuary 3, 2012
Revenues (FY 2020)$2.507 Billion
Key Products/ServicesStationary bicycles and treadmills/Fitness classes and subscriptions

Strengths of Peloton

A huge loyal customer base

As of 3rd November 2021, the brand had over 5.9 million members on its platform with 2.3 million connected fitness subscribers; a huge loyal customers base across the US. The brand boasts of over 92% annual retention rate on its subscriptions. With this strong customer base, Peloton can easily launch a new product.

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It has a direct channel of communication to its customers, good communication strategies with customers help the brand provide a superior customer experience, thereby strengthening its brand, the brand is able to strategically enhance customer loyalty and lastly the brand is able to create and enhance its brand affinity. This strong customer base enabled the brand to survive the 2019 advert controversy that threatened the brand’s survival in the market; its customer loyalty gave it the strength to absorb the shock.

A strong product

Peloton provides a great match for customers’ needs in a unique way. The brand did not introduce fitness equipment or training classes. But the brand took the idea of fitness equipment and fitness training to a whole new level by combining the two; hardware and classes. The brand, therefore, installed monitors among other devices to its hardware so as to access training classes. Its products include Peloton bike, treadmill, training classes, apparel, and accessories.

There has been a growing need for health and wellness among the global populace. This has been occasioned by the increase in lifestyle diseases. Much more, with the advent of COVID that created more time for exercise but restricted it to the confines of one’s home, Peloton’s rose up to be the much sought for the product during the pandemic times. The brand offers bikes, treadmills, and virtual instructions that users can immensely benefit from in the comfort of their homes.

Strong business model; strong sales revenues

Peloton makes its income from the sale of quality equipment and as well from subscriptions for training classes. In 2020, the company reported sales of $ 1,462.2 million from sales of equipment for the year ended 2020 and $ 363.7 million from subscriptions totaling $ 1,825.9 million.

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Vertical integration

Peloton was the first in its industry to have near full control of its production processes. It used vertical integration to control the creation of its bikes, software, exercise classes, and its retail outlets. This propelled the brand into being the leader in the fitness industry.

Rapid growth

Peloton has experienced rapid growth since its inception in 2014. Since the 2nd quarter of 2021, the brand has witnessed a 9.25% growth of its membership and a 12% increase in subscribers. On average, the brand has added more than 540,000 new memberships every quarter from September of 2019.

This growth is a strategic advantage as it provides momentum for further growth of the brand in terms of customers, revenues, employees, and financing options, among other benefits.

Weaknesses of Peloton

Limited geographical markets

The brand operates in three main markets: the US, the UK, Germany, and Canada. The treadmills are particularly solely sold in the US markets and selected parts of Canada. This heavy reliance on one market could pause a significant threat to the existence of the brand, particularly in the event of an adverse occurrence in the US market.

There is every need for the company to diversify its geographic operation to cushion itself against any such eventualities. 

Narrow product range

The brand mainly offers two fitness training hardware; bikes and treadmills, each having two variants of the product. This limits its ability to satisfy the various and numerous customers’ needs that arise in the market. Additionally, its accessories and apparel range are limited when compared to its competitor’s product range that exists in the market.

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Despite its rapid growth and being publicly listed, the brand has still had losses over the years. This could negatively impact on its cash flows and ability to meet its current needs when they arise; this may thus hinder smooth operations of the business.

Dependence on 3rd parties

The company depends on 3rd parties for services like music content, logistics, and suppliers. The lack of total control over these third parties could compromise on its operations, quality, efficiency, and effectiveness

Opportunities of Peloton

More geographic expansion

The brand has obvious opportunities to expand beyond the US borders and its existing markets to numerous countries across the globe. There are numerous individuals across the globe having the same needs when it comes to keeping fit. The brand’s solution could therefore be replicated across its markets with some personalization.

The brand could leverage its brand recognition and experience in the market it achieves faster geographic expansion.

More product range diversification

The brand has a great opportunity to improve its innovative range of equipment, apparel, accessories, and training offerings in the marketplace. This will increasingly differentiate it from its competitors and equally earn it more revenues.

Threats of Peloton

Stiff competition

The brand’s key products include the sale of bikes and treadmills, there are numerous other existing brands dealing in the same. Additionally, there is the threat of new entrants into this market that threatens the market share of Peloton in the long run. The brand needs to increase barriers to entry to guard its market share against any competitors seeking to encroach on the company’s market share.

Government regulations

Any adverse change in government regulations and policies could threaten the existence of the brand in the market.

Conclusion

Peloton is a huge brand in the fitness industry as a result of its innovative idea of combining fitness hardware and training classes. With an established name, the brand needs to continuously innovate to guarantee the sustainability of its brand in the markets.

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