Peloton is partnering with Costco to sell its Bike+ in stores and online from November 1 to February 15. Costco will feature Peloton’s Bike+ in 300 U.S. stores for $1,999 and on Costco.com for $2,199, compared to the typical price of $2,495. The partnership comes as Peloton seeks fresh and profitable ways to reach new customers.
“We’ve been able to architect a deal with Costco that meets our needs for profitable, sustainable unit economics. At the same time, it delivers robust and clear value to Costco members,” said Dion Camp Sanders, Peloton’s chief emerging business officer. He noted that the deal is structured to meet Peloton’s growth needs and tap into Costco’s extensive audience. Peloton’s decision to team up with Costco arrives during a challenging period for the fitness company, led by two board members following the departure of its former CEO, Barry McCarthy.
The company, once laser-focused on growth, is now adopting more creative strategies to expand its user base amidst falling sales and mounting losses. Camp Sanders explained that the partnership with Costco is set for a limited time because fitness is a seasonal category for Peloton.
Peloton’s strategic Costco collaboration
However, Peloton hopes to build on the relationship and potentially expand to other locations in the U.S. and abroad. The deal places Peloton in a retail environment known for its loyal, wealthier customer base. According to analytics firm Numerator, Costco has seen an increase in in-store visits, with a 31% increase compared to pre-pandemic 2019.
Additionally, about half of Costco’s new memberships last fiscal year came from people under 40 years old, indicating a younger demographic that prioritizes health and wellness. Costco’s shoppers tend to be affluent, with 36% having a household income of more than $125,000. Camp Sanders pointed out that these customers usually have disposable income and lifestyles that align well with Peloton products.
Many of them live in larger homes in the suburbs, making it feasible to build home gyms. Overall, the partnership aims to capitalize on the increasing consumer interest in health and wellness, offering a strategic avenue for Peloton to extend its reach to new, potentially lucrative markets.
