Peloton has announced the implementation of a one-time $95 activation fee for new subscribers who purchase its fitness equipment through secondary markets such as Facebook Marketplace. The fee applies to customers in the United States and Canada and reflects the company’s strategy to capitalize on the increasing number of consumers opting for pre-owned Bikes and Treads at more affordable prices.
During its fiscal fourth quarter ending June 30, Peloton observed a significant rise in new members acquiring equipment through peer-to-peer platforms, with this segment experiencing a 16% year-over-year growth. The company noted that these new subscribers tend to have lower churn rates compared to those enrolled in rental programs, indicating a more committed and stable customer base emerging from the secondary market.
Interim co-CEO Christopher Bruzzo highlighted that the activation fee not only generates additional revenue but also supports ongoing investments aimed at improving the overall fitness experience for members. “This activation fee will be a source of incremental revenue and gross profit for us,” Bruzzo stated during a recent call with analysts.
The secondary market presents a lucrative opportunity for Peloton to boost its subscription revenue without incurring substantial upfront costs associated with manufacturing and distributing new hardware. Ari Kimmelfeld, founder of the startup Trade My Stuff—which specializes in selling used Peloton equipment—estimates that approximately one million Peloton Bikes worldwide are underutilized and could be repurposed to attract new subscribers. Trade My Stuff offers significant savings, selling first-generation Bikes for $499 and Bike+ models for $1,199, compared to their new retail prices of $1,445 and $2,495 respectively.
Despite the introduction of the activation fee, Kimmelfeld believes it will not deter potential buyers from opting for pre-owned equipment due to the substantial cost savings and faster delivery times available through secondary channels. “Even with the $95 fee, customers can get a bike delivered faster and cheaper on the secondary market,” he commented.
Peloton asserts that the activation fee is designed to ensure new members receive a high-quality onboarding experience consistent with the brand’s standards. Services include a virtual custom fitting session prior to the first workout and access to a usage history summary detailing the equipment’s previous activity. Additionally, new members are offered discounts on essential accessories such as bike shoes, mats, and spare parts to enhance their workout experience.
The company plans to continue leveraging the secondary market by exploring additional ways to improve the new member experience and educate users about the diverse range of fitness programs and modalities available through Peloton’s platform. This strategic move underscores Peloton’s commitment to expanding its subscriber base and sustaining revenue growth by tapping into alternative sales channels and optimizing customer engagement.
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