Peloton is in a position most of their competitors would love to be in – they can’t keep up with demand. Wait times for the new Peloton Bike+ are currently 10-12 weeks. We recently covered how issues in the Port of Los Angeles were further contributing to delays.
Last week during Peloton’s Q1 2021 earnings call, Peloton CEO John Foley dedicated a portion of the call to addressing the delays. He noted that the Bike+ in particular had a number of factors contributing to the delay. These include the issues at the Port of Los Angeles, stronger demand for the new Bike+ than they anticipated or forecasted, warehouse shutdowns due to COVID-19, and then in some specific areas, further delays due to forest fires and hurricanes.
However, Peloton plans to take a number of steps to try to get things back under control. John Foley mentioned 4 specific steps they would be taking:
- Adding manufacturing capacity & increasing production. This is partially being accomplished by swapping some product lines over to make Bike+
- Paying for expedited shipping from their factories in Asia to the US, both by adding air freight, and using expedited service by boat.
- Scaling their customer support team to handle the increased call & chat volume
- Making sure to clearly communicate on their website expected order time by product
Those were the steps being take in the next few months & quarters. However, they made sure to highlight some other changes that have been in work over the past year+ as well, including:
- The delivery team has grown from 900 to over 2,200 members
- Peloton now has more than 700 delivery vans across the US
- The number of last mile hubs or warehouses has grown to 47
As a result of this, Peloton notes that they have been able to get the lead time on the original Peloton Bike down to 4-6 weeks. They hope by the end of the year to have this back down to their goal of 1-2 weeks.
However, Peloton expects the new Bike+ to have extra long wait times & backlogs for at least another quarter or two. This means it will likely be until the Spring of 2021 before the Bike+ shipping & order delays are back to normal. They attribute this due to both the higher than expected demand, as well as it being a new product, which means it has new components. The new components require a new supply chain, and it takes additional time to be able to scale and speed up those new supply chains. At time of publishing the Bike+ delay is currently 10 weeks – over the last few weeks it has been fluctuating anywhere from 10-12 weeks.
As part of their longer term goals to add manufacturing capacity, a new Tonic factory will be brought online by the end of the year (Peloton acquired Tonic last year). Peloton President William Lynch noted during the call that the factory timeline was still on track, but it will take some time to get it operating at full capacity. The new factory will have the ability to flex production levels between different product lines as necessary to meet surges in demand.
Finally, Peloton noted that they believe that issues with the Port of Los Angeles will continue for the foreseeable future. This is due to more shipments coming in through the port in the near term (being sent by all US based companies, not just Peloton), as well as there being staffing issues at the port due to COVID-19.
One other interesting fact is that it was mentioned that Peloton has been investigating adding some US manufacturing capacity. No other details were provided, and it wasn’t specified whether it would be for entire Bikes or Treads, or instead just for manufacturing smaller components that might be used for service calls & repairs, or accessories.
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