Peloton is finding itself in familiar territory – with thousands of potential customers facing delays getting their Peloton Bike or Tread they ordered delivered in a timely fashion. While the company has been in this situation before – the company is trying to get ahead of the issue now, and making some public statements and promises.
In his interview today with the New York Times, Peloton CEO Barry McCarthy directly addressed the issue, implying there were more than 10,000 people who were experiencing issues. He said:
For the next couple of weeks, we’re going to get a bloody nose because of the move to third-party distribution. We had 10,000 people scheduled to receive bikes from Peloton, and we moved them over to third parties. Ten thousand people are getting rescheduled. Plus, some of those 10,000 are going to get rescheduled again. So we need to up our comms game. And then, make sure that we’ve got people with the appropriate level of experience and expertise.
As a first step of “upping their comms game”, Peloton has posted a new article today publicly addressing the issue, and letting the world know know they’ll be taking some steps to try to make right by members impacted by the delay. This includes offering a month month membership waiver, or a partial refund of their order.
Those who are awaiting a new order that is delayed will be getting the partial refund. If you are awaiting a repair that is delayed, or swap of an existing product due to an issue, you’ll be getting a free month of membership.
Our first task will be to address supply chain issues causing some Members to experience longer-than-usual wait times for deliveries and repairs. For Members who experience delays and reschedules as a result of changes to our delivery processes, we will be proactively offering a partial refund on your order. For Members whose repair or swap has been rescheduled, we will apply a one month waiver to your All-Access Membership. Your refund or waiver will be automatically processed, you do not need to take any action. We feel your frustration and will do everything we can to regain your trust and quickly make good on new orders.
Peloton shares that the company had been making decisions to try to enhance the customer experience, but they didn’t live up to their standards, saying:
As many of you may know, our previous leadership team made certain decisions during COVID regarding the supply chain and operations that did not work. These were made in the hopes of excellence in customer service, but fell short of our standards. We’re sorry for what happened and now stand committed to taking a better approach.
Under the guidance of our new management team, Peloton is acting decisively and hitting the reset button while working to optimize our operations, delivery logistics, and service.
They continue by noting it is a “period of transition” so it might take some time to resolve the issue:
Our Member experience is our top priority and we will do whatever it takes to make this great. During this period of transition, please know that we are doing everything we can to fix these issues as quickly as possible and we won’t rest until all of our Members can have the great Peloton experience they signed up for.
As mentioned above, this is not the first time Peloton has found themself in this situation. Peloton saw massive shipping delays in the fall of 2020, which at the time were due to surging demand, and Peloton not having enough manufacturing capacity.
The company poured all their time & energy into scaling up production & delivery capacity (including starting on a new $400 million US production facility), but it turns out they had scaled too much. Demand did not grow as much as Peloton thought, and the company was forced to pause production as inventory piled up.
All of this combined led Peloton to announce a massive restructuring earlier this month, which saw the departure of Peloton Founder John Foley from the CEO position, and more than 2,800 employees laid off, along with them announcing the closure of their new US factory that was still being built.
As part of this restructuring, Peloton also announced that they are shifting more of their delivery to third party partners like XPO, JB Hunt and others. Previously Peloton had delivered around 60% of their products and partners the other 40%. That ratio is now switching to be closer to 40% of deliveries done by Peloton, and 60% by partners.
As a result of this shift, and dozens of Peloton’s local shipping hubs being impacted by the layoffs, many customers who are awaiting delivery have reported getting emails notifying them that their delivery has been cancelled. Some of those cancellations are coming the day delivery is supposed to occur. When trying to reschedule, many people are reporting that there are no available time slots that they can change to, so their delivery is sitting in limbo.
There have also been unconfirmed reports that some of these deliveries won’t be possible for another month or so, as Peloton tries to get new delivery partners up to speed and able to deal with the higher capacity.
At the same time Peloton is trying to sort out all of their delivery issues, they also recently reinstituted a delivery fee in some countries. Delivery had been included in the price of purchases for the last several years, but in some markets, Peloton began charging for delivery again as of January 31st, 2022. In markets where delivery is still included for free, the price of the products was just raised by the equivalent amount.
We’ll continue to provide updates if Peloton shares any additional details.
You can read the full letter in it’s entirety below:
Dear Members,
Peloton was founded with a clear set of values: the most important being to put our Members first. Since that day, we have always worked to empower our more than 6.6 million Members to be the best versions of themselves – anywhere, anytime. This belief is reflected in all that we do as a company – from our products and services, to our Member experience, to our operations and commercial decisions.
Part of putting Members first means operating with a bias for action and acknowledging issues when they happen and moving quickly to fix them. For those reasons, we’d like to share an update on our deliveries with all of you today.
As many of you may know, our previous leadership team made certain decisions during COVID regarding the supply chain and operations that did not work. These were made in the hopes of excellence in customer service, but fell short of our standards. We’re sorry for what happened and now stand committed to taking a better approach.
Under the guidance of our new management team, Peloton is acting decisively and hitting the reset button while working to optimize our operations, delivery logistics, and service.
Our first task will be to address supply chain issues causing some Members to experience longer-than-usual wait times for deliveries and repairs. For Members who experience delays and reschedules as a result of changes to our delivery processes, we will be proactively offering a partial refund on your order. For Members whose repair or swap has been rescheduled, we will apply a one month waiver to your All-Access Membership. Your refund or waiver will be automatically processed, you do not need to take any action. We feel your frustration and will do everything we can to regain your trust and quickly make good on new orders.
Our Member experience is our top priority and we will do whatever it takes to make this great. During this period of transition, please know that we are doing everything we can to fix these issues as quickly as possible and we won’t rest until all of our Members can have the great Peloton experience they signed up for.
Thank you for your continued support. We are grateful for this remarkable community.
Together we go far!
– Team Peloton
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I am one of these customers that has been affected. I ordered my tread December 9,2021 and haven’t been able to get a delivery date scheduled yet. I have gotten such run around with customer service and no is able to give me a clear shot of when I can expect my new tread. I had issues for the frame swap of my bike in 2020 as well. So frustrating that I hope they do give a partial refund on orders.
Well I did get my tread in December 2021 but it completely died a month later. So disappointed. It was supposed to be fixed today but peloton sent us an email just now saying the repair is delayed. Very annoyed!