Peloton Partners with Costco to Reach New Customers
In a bid to expand its customer base, Peloton has announced a new partnership with Costco. The fitness company will sell its stationary bikes at Costco’s stores and on its website, marking a significant shift in its sales strategy.
A Steep Discount for Costco Members
Under the terms of the deal, Costco will offer Peloton’s Bike+ for $1,999 in 300 of its U.S. stores, and on Costco.com for $2,199 between November 1 and February 15. This represents a significant discount from the typical price of the Bike+, which is currently selling on Peloton’s website for $2,495.
A New Era for Peloton
The partnership comes at a time of transition for Peloton, which is being led by two board members after the departure of its former CEO Barry McCarthy. The company is shifting its focus from growth at all costs to profitability, and is looking for new ways to reach customers.
Why Costco?
According to Dion Camp Sanders, Peloton’s chief emerging business officer, Costco was chosen for its strong fan following and wealthier customer base. “We’ve been able to architect a deal with Costco that meets our needs with regard to profitable, sustainable unit economics, while at the same time delivering robust and clear value to Costco members,” he said.
A Seasonal Partnership
The partnership with Costco is only for a limited time, as fitness is a seasonal category for the company. However, Peloton hopes to build on the relationship and potentially expand it to future locations in the U.S. and abroad.
Reaching a Younger Demographic
Costco’s members are getting younger, with about half of new membership sign-ups last fiscal year coming from people under 40 years old. This demographic is prioritizing health and wellness, and is willing to invest in it.
A Premium Product for Affluent Customers
Peloton’s products are well-suited to Costco’s affluent customer base, which has the disposable income to afford premium products. “Many of Peloton’s members are affluent, they often have larger homes in the suburbs and they also have life situations where Peloton fits a clear need,” said Camp Sanders.
Expanding Relationships
Peloton is also working to develop relationships with other companies that cater to similar customer bases. For example, hundreds of Hyatt Hotel properties have Peloton equipment on site, and the company has announced a deal with Truemed to allow members to use pretax earnings to buy certain hardware products.
Leave a Reply