Our Peloton SWOT analysis examines the Strengths, Weaknesses, Opportunities and Threats that the exercise equipment company faces.
Let’s be honest, working out can be tough. Even the people who love working out love what it does for them and not the actual process, right? Well, part of the reason it is so hard to work out is to make the trip to the gym. What if the gym came to your home? In this Peloton SWOT analysis, we are going to learn about the company that brings the work out to you at home. Also, make sure to not miss out on our PESTLE analysis of Peloton!
Peloton is an American company and is headquartered in New York City. The main products that they offer for sale are their stationary bicycles and treadmills. What makes them unique is that they also provide the service of internet connection that basically enables the users of the equipment to be connected to media for following workout regimes.
Basically, upon subscribing to their service, a person can have access to exclusive exercise programs to meet their weight goals all from the comfort of one’s home.
Users have two options; if they pay $39 for a monthly subscription, they have access to very cool features and classes for exercising, however, if they don’t want to pay as much, they have the option to pay $12.99 to have access to content on the company’s website and application.
At the moment, this company has a total of 123 showrooms and 2 studios. Out of these, 78 showrooms exist in the USA and Canada and 12 exist in the UK and Germany. The showrooms are actually studios where people come to take the classes; the ones who don’t mind traveling to the devices.
So basically the company is very innovative in its operations. In the following SWOT Analysis, we will try and analyze how Peloton is performing as a company. Basically in any SWOT template, we deal with the four key factors which have a role in explaining the performance of a company.
These four factors are the strengths, weaknesses, opportunities, and threats. Before we talk about the analysis in detail, it is important that you understand that the first two factors are internal in nature whereas the latter two are external. The reason for classifying can be explained using examples.
Internal factors are basically controllable from within the entity being analyzed in a SWOT; in this case the company Peloton. These factors can be influenced by the company itself. Suppose that Peloton has amazing sales; this is a strength for the company because their hard work has made it possible for so many units to be sold. Hence, this is an internal factor.
External factors, on the other hand, are the opposite and cannot be controlled or influenced by the company. They occur in a rather unprecedented manner and have to be adjusted to. If we say that Peloton has a very strong competitor taking over the market share, this would be a threat for the company.
It is a threat because it cannot simply be controlled. So this is how external factors work. Now that we know all of this clearly, we can move on ahead and work on how the SWOT can be conducted for Peloton.
What are some of the biggest strengths Peloton has?
The company has been able to perform very impressively over the years. The reason can be attributed to the strengths of Peloton. Though many qualities can be added here, to keep things concise we will address only the most relevant ones. Here they are.
Unique Service
Peloton has been able to disrupt a space that has been heavily dominated. Exercise equipment can be found everywhere but exercise classes are somewhat exclusive.
The peloton has been able to combine the two worlds into one, and this has proven to be an excellent strength for the company because it gave them an edge.
Customer Base
The company has a huge number of customers all thanks to the innovative products and services that they offer. As of 2022, they have 2.33 million subscribers and they also have an excellent retention rate; 92% of customers have stayed with Peloton upon subscribing to their services.
Vertical Integration
Very few companies that operate at the scale of Peloton are able to enjoy vertical integration of their processes. What this means is that they not only cater to the retail space, they are also actually the ones producing their machines.
This helps them in controlling all of their business processes and eventually helps in saving a lot of costs as well. It is a big feat for the brand to be able to pull off mass manufacturing and maintain the quality that they offer.
Growth
Peloton has been able to enjoy a decent and constant growth in the number of people that choose to subscribe to their services.
This has been made possible because of the two subscription options they have for people with different levels of commitment to working out.
What are some of the biggest weaknesses Peloton has?
Their success story is surely very inspirational but they do have certain weaknesses that they should work on getting removed. Here are some of the most important ones they have to mitigate. This can also be done by availing more opportunities or by building more strengths.
Limited Market
As we already know, Peloton is currently found in the USA, the UK, Canada, and in Germany. And out of all of these countries, the vast majority of their sales take place in the USA.
This is a weakness for the brand because when their numbers are growing so fast, they should be worried about reaching a saturation point in these markets.
This is why it is imperative that they should be looking to other markets for growth.
Small Product Line
They practically are selling their units which consist of two types of equipment; treadmills and bicycles. A company like Peloton should be working towards introducing their exercise programs and internet services on other gym equipment too.
There are so many people who have knee or other types of injuries and limitations which hinder them from using treadmills and cycles. They should be introducing other equipment so that everyone has their preferred choice to exercise with.
Service is Outsourced
The exercise programs that they offer to the users are basically not produced by the company themselves. This can actually impact the quality of their work should they ever develop conflicts with these external parties.
What are some of the biggest opportunities that Peloton can explore?
As long as Peloton is able to recognize as well as adequately utilize the opportunities that come their way, they have a long prosperous journey ahead of them. Here are some things they should be taking into consideration.
Covid-19
Whereas for most businesses and industries around the world, Covid has been a detrimental and devastating reality because it has actually ended many as well, if not severely damaged.
Businesses like Peloton have an edge because they are targeting households. People who already wanted to work out at home got the machines and when the pandemic hit, everyone was forced to stay indoors. Physical fitness started getting impacted so what happened was that more and more people got on the bandwagon of owning a Peloton.
This is why in 2020, the brand also decided to invest more in their shipping services which actually got blocked due to the massive surge of orders. They spent a total of $100,000,000!
Now that staying indoors and finding alternatives to everyday life; the new normal has been achieved, Peloton should work excessively on converting more and more users.
Global Expansion
To build on ending the weakness, they should be investing a lot in R&D for new market development. The world can be their oyster if they plan out their strategies carefully. There are so many markets that will love their products.
They can start the journey by first filling out the markets they presently serve; Canada even doesn’t have Peloton everywhere.
Increase Product Lines
The product lines that the company has are just not enough to take them ahead to the kind of height they want to achieve.
This also will eliminate their weakness; they should be working on introducing every sort of gym equipment, the basic ones at least that everyone can use so that they offer more variety to consumers.
Very few people would buy everything for their home; most just want their type of equipment to stay fit. However, there are people who like to invest in home gymnasiums as well.
What are some of the biggest threats to Peloton?
Everything is not all fun and games for the company, they should be very careful about the threats mentioned ahead.
Competition
The one threat that can be found for every business in every industry is the threat of competition.
Although they don’t have competitors that offer machines with internet subscriptions, at the end of the day they sell cycles and treadmills which can be found from so many other brands and probably at better prices too if we consider that they don’t offer the internet.
Many people simply need gym equipment and they use it at their own pace; without a formal exercise program. So this is a threat Peloton needs to consider because people might just buy from the competition.
First Mover’s Disadvantage
Although being the first mover in this market has enabled them to capture a huge chunk it also creates problems because they have already done all the hard work as well as the homework to create the demand for this product.
The market that they currently cater to is not that diverse, to begin with. It is only a matter of a few days we hear about some follower businesses which start introducing similar products and services in markets that are not being catered to by this business.
So they have a huge threat of new entrants because the barriers might be high in terms of developing these products on a mass scale like Peloton, it still can be done in different markets.
Peloton SWOT Analysis: Final Thoughts
Of all of the SWOT examples that we have discussed, this one has been very unique because of the disruption they have created.
This was a brilliant way to familiarise oneself with the SWOT framework because in the article we not only understood the application of the SWOT, we learned a lot about Peloton as well.
Based on the information that has been compiled here, it can be said without an inch of doubt that Peloton has amazing strengths and their journey has been amazing to watch over the years. They have blown up so much in such a short time that too on the basis of two products only.
That being said, having only two products is not a suitable ploy for the company especially as the years go on. They have to work on their weaknesses and almost all of them can be eliminated by converting them into opportunities.
The threats also will be mitigated if they work on their product lines so that they are able to build on the factors that have made them such a success in the first place.
