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Written by Pauline Neerman
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Why Amazon and Nike are battling over exercise-bike hype Peloton

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General8 February, 2022

Who will haul Peloton off the stock market? Amazon and Nike are two major candidates for the American brand of exercise bikes that caused a sensation during the coronavirus pandemic. But now the share price is in the dumps, it is an interesting target for retailers and sports brands… but what can they achieve with Peleton?

 

Steep descent after climb

Peloton boomed in the United States during the Covid pandemic: the brand not only sells exercise bikes, but also offers an entire experience around it, such as online coaching and video training. The lockdowns during Covid have been a dream come true for the company: with well over 2.5 million members, it climbed to an estimated value forty billion euros last year…

 

Now that gyms have reopened, the company has had a rude awakening: the share price has plummeted by 80  in one year and Peloton is only worth seven billion euros on the stock exchange. It has even recently halted the production of new exercise bikes and treadmills, because demand has fallen so low. Safety issues, which led to the death of a child and a recall, also damaged the brand.

 

Investor Blackwells has subsequently sent an angry open letter to the “incompetent” management of the company (which has had its effects: CEO John Foley had to step down immediately) and urged a sale. Amazon and Nike promptly answered this call and expressed their interest, especially since the low share price.

 

An asset for the ecosystem

For Amazon and Nike, the acquisition would, in any case, be an exciting idea to expand their respective ecosystems. Both companies want to offer their consumers an all-encompassing solution that engages (and binds) them as much as possible and through multiple channels. 

 

Nike, for example, no longer calls itself a sports goods manufacturer but sees itself now as a technology company. The sportswear producer has numerous apps, invests in a membership programme and wants to offer customers all kinds of additional services. Thus, Nike is becoming a provider of sports solutions and a true ‘community’ for athletes that accidentally made their running shoes. As Peloton offers fitness equipment and accompanying content to members, it fits perfectly into this concept.

 

Amazon, on the other hand, is increasingly focusing on health apps and tools, such as the fitness tracker Amazon Halo and its own pharmacy service. The e-commerce giant does not stop just there: Jeff Bezos’ Everything Store wants to provide customers with literally everything, from their daily dose of films (Amazon Prime Video) and gaming (Twitch) to cloud storage (AWS). Amazon wants to follow consumers throughout their lives and serve them at every turn, including the moments they spend on an exercise bike. Will Bezos also provide you with a sports drink and protein bar?

 

All for ‘rundle’

Peloton is also interesting for both companies because it uses a ‘rundle’ model: that is short for “recurring revenue bundle” and is a term used to describe the subscription models that brands and retailers are increasingly using. At Peloton, in addition to purchasing a fitness device, customers pay a membership fee to gain access to additional services (bundle), specifically instructional videos, video sessions and other content. This way, the company generates recurring revenue independently of the (variable) sales of devices and actual use. Amazon does the same with its Amazon Prime subscriptions, and Nike employs it through its paid apps and loyalty programmes. 

 

Who will win the fight? The match between Peloton and Nike is probably the best one, news site Protocol explains. Nike has a large and loyal customer base, but does not sell any devices yet. Moreover, both companies reach the same target group: people who own a Peloton bike are more often than not wearing a sleek Nike outfit.

 

Whether there will be a sale at all is still uncertain, however: the founder and the management still have 80  of the votes, and so far, they do not plan to sell the company. However, something is moving at Peloton: after revealing its plans, the company announced that it would cut as many as 2,800 jobs, including founder and CEO John Foley. 

 

 

Want to know more about rundle and why more and more brands and retailers think of themselves as an ecosystem? You can soon read all about it in the new book The Future of Shopping: Re-set Re-Made Re-tail by Pauline Neerman and Jorg Snoeck, which will be published this spring.

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Who will haul Peloton off the stock market? Amazon and Nike are two major candidates for the American brand of exercise bikes that caused a sensation during the coronavirus pandemic. But now the share price is in the dumps, it is an interesting target for retailers and sports brands… but what can they achieve with Peleton?   Steep descent after climb Peloton boomed in the United States during the Covid pandemic: the brand not only sells exercise bikes, but also offers an entire experience around it, such as online coaching and video training. The lockdowns during Covid have been a...

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