Peloton has announced that it will charge a one-time fee of $95 for new subscribers who activate used hardware, responding to the growing trend of purchasing second-hand devices at significantly reduced costs.
The introduction of this fee for U.S. and Canadian members coincides with a significant increase in customers purchasing used bikes and treadmills from platforms like Facebook Marketplace.
In its most recent fiscal quarter ended June 30, Peloton saw a strong increase in new connected fitness subscribers opting for hardware from secondary markets, marking a 16 percent increase over the prior year.
“This trend not only expands our user base, but also shows lower cancellation rates than those who rent equipment,” Peloton said in a shareholder briefing.
Interim co-CEO Christopher Bruzzo said in a call with analysts: “This new share represents an additional revenue stream and increases our gross profit, supporting our ongoing efforts to improve the overall fitness experiences for our members.”
While Peloton equipment is widely used for home workouts, it has been ironically criticized as underutilized, with some units serving more as storage than exercise equipment. Notably, the majority of Peloton’s revenue comes from ongoing subscription fees rather than initial hardware sales.
The strategy of engaging price-sensitive consumers in the secondary market who sign up for ongoing subscriptions represents a new source of revenue for Peloton, without the additional costs typically associated with new sales.
Ari Kimmelfeld of Trade My Stuff, a company that deals in used Peloton machines, highlighted the potential for significant revenue generation through resale. “Despite the new fee, the secondary market remains attractive due to faster and more convenient access to equipment,” Kimmelfeld noted. His company offers competitive pricing on older models, making them affordable compared to new units.
Trade My Stuff also promises fast delivery times, comparable to purchasing new products from Peloton, with service available in several major cities and standard shipping elsewhere.
Peloton says the activation fee will ensure that new members using pre-owned equipment will receive a quality onboarding experience comparable to those purchasing new equipment. This includes virtual customization of the equipment and a detailed history of its use.
Additionally, Peloton plans to offer these customers discounts on various accessories and continue to explore new ways to enrich their experiences, such as introducing them to a wider range of workout programs and educational content from the company’s fitness experts.
