Specialist
Former executive at Peloton Interactive Inc
Agenda
- Peloton’s (NASDAQ: PTON) newly announced partnership with Amazon (NASDAQ: AMZN) – distribution dynamics and wider implications
- Peloton’s turnaround efforts, including potential merits and drawbacks
- Digital fitness competitive landscape, consumer lifetime value and CAC (customer acquisition cost) trends
- Near-to-long-term at-home fitness industry demand outlook
Questions
1.
What are your initial thoughts and impressions about Peloton’s strategy shift announcement today? The company is expanding its distribution through Amazon, making it the first time it is selling outside of its own ecosystem. What are the implications of this development?
2.
You noted some of Peloton’s pilot programmes didn’t come to fruition with players such as Nordstrom. Why do you think those never amounted to anything?
3.
What assumptions could we make about Peloton’s agreement terms with Amazon? For example, if Nordstrom failed to come to fruition because of unfavourable terms, what might be happening on the back end with Amazon?
4.
Can you elaborate on equipment delivery and set-up fees? Peloton stipulated in January 2022 that USD 250 and USD 350 were respectively added to the prices of its bike and treadmill. What happens now with these costs for the consumer?
5.
What happens to the reverse logistics? If someone buys a Peloton bike through Amazon and decides it’s not for them, would they return it via a Whole Foods or a Kohl’s?
6.
Are you concerned at all about poor delivery execution on Amazon’s part given the company built its business around small parcels, and less so around heavy items such as a Peloton bike?
7.
Would it make sense for Amazon to potentially roll out its separate fleet of last-mile to fulfil any of the Peloton-specific deliveries?
8.
Can you comment on the CAC [customer acquisition cost] implications? You mentioned the delivery cost could be justified if CAC could be lowered by a generous amount, let’s say USD 500. What CAC trends and expectations would you note, whether broader industry trends or inputs?
9.
Do you think the target to reach gross margin of zero is attainable at any point?
10.
What are your thoughts on Peloton Guide? It seems unlikely that there’s excess Guide inventory – the company is more looking to get consumer adoption. What is your outlook for Guide, especially now they’re being sold through Amazon?
11.
How are you assessing the smart-home ecosystem and whether there’s a business case for the Guide potentially turning into an Alexa or vice versa? Could the hardware operate as a two-in-one at any point?
12.
Could parts of the Peloton business be folded into the Amazon component? What does adding Amazon as a channel do for the apparel segment, which I think was in decline after press reported the company had slashed projections for 2022 sales expectations?
13.
What do you think the current overlap is between Amazon Prime and Peloton members?
14.
How might Amazon’s relationship impact the consumer perception of Peloton, which was known for its white-glove delivery service? It was an exclusive offering and now Amazon is bringing it to the masses.
15.
Could the Amazon relationship drive stickiness for Peloton by building a new layer of trust? Might the partnership do anything to reinforce the ecosystem’s stickiness?
16.
Do you have any thoughts about potential key hires, particularly Peloton bringing a former Amazon cloud exec into the fold as a new CFO?
17.
What might happen to Peloton’s standalone e-commerce performance now Amazon is in the picture?
18.
Can you elaborate on the financing component? Would consumers buying a Peloton bike via Amazon still have the opportunity to finance the purchase in the same way as through Peloton.com directly?
19.
Do you find the likelihood of a potential takeover has entirely dissipated for Peloton, or does the partnership make you question the likelihood of a potential Amazon acquisition?
20.
What’s your post-mortem on Lululemon’s 2020 acquisition of Mirror?
21.
What was the strength of Mirror’s tech and IP? How would you respond to those characterising Mirror as just a big iPad that was reflective?
22.
What are Peloton’s shortfalls on the tech front?
23.
What’s your assessment of Peloton’s medium-term turnaround efforts and other moves around logistics, leasing and licensing? You mentioned the shift from a vertically integrated operation to now outsourced logistics and manufacturing. Was that the right move? How relatively successful do you think this has been so far, stripping the Amazon components out of the equation?
24.
What could happen to Peloton’s pilot programme with bundled pricing?
25.
What might lifetime value look like for those in the current standard Peloton model vs those looking to a bundle?
26.
What are your thoughts on Peloton’s cost-cutting progress and initiatives?
27.
Do you think other connected fitness players have narrowed the gap on Peloton in the last 1-2 years?
28.
How might the fitness industry react to a potential recession, noting that inflation is already in the picture?
29.
What could the holidays spell for Peloton?
30.
What are your thoughts on the proposition between boutique fitness and at-home fitness? How has that potentially widened, particularly given people returning to office?
31.
What are your thoughts on longer-term demand for connected fitness?
32.
If you owned 100% of Peloton today, what would you be most excited about vs might keep you up at night?
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