Peloton invests $100 million to fly bikes overseas as customers ask "where's my bike?"
Peloton is investing $100 million to help clear a backlog of undelivered stationary bicycles— and try to appease thousands of frustrated customers who say they've been waiting months for their pricey exercise stations.
Stay-at-home orders, gym closures and other measures aimed at slowing the spread of the novel coronavirus have fueled demand for at-home workout alternatives, giving Peloton a huge sales boost.
The company on Thursday said its revenue more than doubled in the second quarter, to nearly $1.1 billion, while subscriptions to its digital fitness offerings grew 134%.
But the nine-year-old startup has failed to keep up with the unprecedented demand for its products, projecting months-long delivery estimates and missing shipping deadlines from its factories in Taiwan. Bikes are reportedly piling up at West Coast ports in Los Angeles and Long Beach, California.
Frustrated customers have taken to Facebook to vent to others also stuck at home waiting for the exercise machines, which start at $1,895 and come with a digital touch screen that displays interactive, on-demand workouts.
Some 10,000 members are part of a "Peloton Delivery Discussion Group" whose description reads: "If you've ordered a Peloton and are anxiously waiting delivery, this is the group for you!"
Others have shared their frustration directly with the company. A Facebook user named Stacy Kihara, based in Hawaii, said she still hasn't received the Peloton bike she ordered in August. "Funny, 6-8 month delivery was never mentioned when we dropped $3k on a bike we can't ride!" she wrote on Peloton's Facebook page.
No stranger to complaints and controversy
Peloton has found itself in hot water in the past, over music licensing agreements and a controversial holiday advertisement.
Peloton co-founder and CEO John Foley on Thursday addressed customers' frustrating delivery experiences, and pledged to invest more than $100 million in "to help expedite the movement of bikes and treads globally, in order to meet our delivery commitments."
Foley said that while Peloton has already increased manufacturing by more than six times in the last 12 months, shipping remains a sticking point.
"We obviously need to get the bikes and treads from our overseas production facilities into your homes, and that has also proved challenging in this environment," Foley said in a statement to customers.
Foley said the company will begin shipping bicycles by air instead of by sea to avoid congestion at U.S. ports. The company also plans to ramp up its U.S. manufacturing operations in North Carolina and Washington state, which are closer to many of its customers.
In the meantime, the CEO urged anxious customers to begin their "Peloton journey" with the Peloton App from which users can stream yoga, strength and cardio classes through their phones and televisions — no bicycle required.
Peloton shares fell more than 7% on the company's shipping news Thursday. Shares were down more than 10% midday Friday, at around $147.
The stock price is up more than 470% since mid-March, when the coronavirus pandemic erupted across the U.S.
