Peloton announced that they will start charging new subscribers who purchase their equipment on the secondary market a one-time $95 activation fee. This fee is aimed at consumers who are buying lightly used Peloton Bikes or Treads from sources like Facebook Marketplace. The company noted a significant increase in new members who purchased used equipment during the last quarter, with a 16% growth year over year. Peloton believes that these subscribers are incremental and have lower churn rates.
The activation fee will provide additional revenue and gross profit for Peloton, allowing them to invest in enhancing the fitness experience for their members. It also helps to offset the revenue loss from subscribers who stop using their equipment or cancel their monthly subscriptions. Peloton sees an opportunity to attract budget-conscious members from the secondary market who are willing to pay for a subscription, generating new revenue without upfront costs.
Ari Kimmelfeld from Trade My Stuff estimates that there are around a million Peloton Bikes collecting dust in homes worldwide, offering a potential source of revenue for the company. Trade My Stuff sells used equipment at significantly lower prices than new, providing faster delivery and cost savings despite the new activation fee. Customers purchasing used equipment will still receive the same high-quality onboarding experience as those buying new, including custom fittings and discounts on accessories.
The activation fee is part of Peloton’s strategy to ensure a consistent and high-quality experience for all members, regardless of whether they purchase new or used equipment. The company plans to continue expanding and improving this channel, offering education on different fitness modalities and instructor-led programs to enhance the new member experience.
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