Report: Peloton moving to all 3rd party delivery & service/repairs – Peloton warehouse locations being closed

Peloton’s restructuring that impacted member support agents being laid off this morning appears to be having a larger impact than originally known.

We are now hearing that Peloton is also announcing plans to close most/all of their warehouse & delivery locations (at least in the US, other countries are not confirmed yet). This will not be an overnight transition, although it appears many of the warehouses and Peloton locations will be closed by the end of 2022. Many of the employees working at Peloton’s warehouses will be laid off a result of this change.

This means that moving forward, Peloton will be relying completely on third party vendors (such as XPO and other partners) for delivery. These third party vendors will also be responsible for handling service & repair calls for customer – whether they are covered under warranty or not.

Update – following our initial report, Bloomberg is reporting the same news, saying “Peloton will stop using in-house employees and vans to deliver equipment and shutter 16 warehouses across North America. Instead, it will rely on providers of third-party logistics, or 3PL, to set up bikes and treadmills at customer homes.”.

In February 2022, Peloton began shifting more their delivery & service to third party partners as one of the first initiatives under new CEO Barry McCarthy – although that led to Peloton refunding some members and some delays as they worked through the transition.

Today’s move appears to be the continuation of that initiative, and a continuation of Peloton’s recent trend to outsource more and more pieces related to the physical hardware of Peloton Bikes & Treads. Last month Peloton announced that although they owned their own manufacturing subsidiary, they would be outsourcing manufacturing of their hardware moving forward. Now, Peloton appears to be outsourcing all delivery as well.

McCarthy discussed this change in a memo sent to remaining employees, saying:

We continue to make strategic changes to our operations and workforce. Following last month’s exit from owned-manufacturing in Taiwan, we are now restructuring our final mile delivery capabilities by expanding our work with our third party logistics (3PLs) providers. As a result, we are eliminating our North American Field Ops warehouses, resulting in a significant reduction in our delivery workforce teams.

Unfortunately, this means a number of team members will be departing the company. We know changes of this nature are never easy.

The shift of our final mile delivery to 3PLs will reduce our per-product delivery cost by up to 50% and will enable us to meet our delivery commitments in the most cost-efficient way possible. I also want to highlight that we have been actively working with our 3PLs to dramatically improve the member experience, and we are seeing positive momentum in those CSAT scores. This has been a challenge. We won’t fix it overnight, but we have no choice but to make it work, so we’re leaning into it and proactively managing our 3PL relationships. We are confident in the plan we’ve put in place, and we’re encouraged by the progress we’re making.

This is a developing story and will be updated.

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Chris Lewis
Chris Lewis is the creator & founder of Pelo Buddy. He purchased his Peloton in 2018, and uses all the different devices: Peloton Bike, Tread, Row, and Guide. He has been involved in the fitness industry for more than a decade - previously co-founding the websites Mud Run Guide & Ninja Guide. You can find him on the leaderboard at #PeloBuddy.

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