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Why Peloton's Business Model is so successful?

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Peloton’s Company Overview


Peloton Interactive, Inc. is a leading global interactive fitness platform that revolutionizes the fitness industry by merging high-design with modern technology to provide access to live and on-demand fitness group classes led by elite NYC instructors. Founded in 2012 and headquartered in New York, Peloton uses technology and design to connect the world through fitness, empowering people to be the best version of themselves anywhere, anytime. The company offers Peloton Bike, an indoor cycling bike; Peloton Tread, a treadmill that includes live and on-demand fitness group classes; and Peloton Digital, which offers access to its classes through iOS, Android, web, and various other platforms. Peloton's vertically integrated, tech-proprietary platform boosts engagement by providing a fully immersive fitness experience. Business Model: Peloton operates on a hybrid business model that combines the sale of physical products (Peloton Bike and Peloton Tread) with a subscription service (Peloton Membership). The company sells its high-end, proprietary fitness equipment directly to consumers, who can then access Peloton's content and interactive software by subscribing to their monthly membership service. This subscription gives users access to live and on-demand classes across various workout categories, including cycling, running, strength, boot camp, yoga, and more. Peloton's business model revolves around creating a community of engaged and motivated users by the shared fitness experience, which drives the sales of its products and subscriptions. Revenue Model: Peloton's revenue is primarily generated through two streams: the sale of its fitness equipment and the subscription service. The company makes significant revenue from selling its high-end fitness equipment, the Peloton Bike and Tread. On top of the equipment sales, Peloton also earns recurring revenue from its monthly subscription service. The All-Access Membership, priced at $24 per month, allows users to access unlimited live and on-demand classes. Peloton also offers a digital-only subscription for those who don't own Peloton equipment, priced at $12.99 per month. Combining high-margin hardware sales and recurring subscription revenue allows Peloton to maintain a strong and sustainable revenue stream.

https://www.onepeloton.com/

Country: New York

Foundations date: 2012

Type: Private

Sector: Consumer Goods

Categories: Lifestyle


Peloton’s Customer Needs


Social impact:

Life changing: motivation, affiliation/belonging

Emotional: design/aesthetics, wellness, fun/entertainment, provides access

Functional: connects, quality, variety, sensory appeal, informs


Peloton’s Related Competitors



Peloton’s Business Operations


Customer relationship:

Due to the high cost of client acquisition, acquiring a sizable wallet share, economies of scale are crucial. Customer relationship management (CRM) is a technique for dealing with a business's interactions with current and prospective customers that aims to analyze data about customers' interactions with a company to improve business relationships with customers, with a particular emphasis on retention, and ultimately to drive sales growth.

Customer loyalty:

Customer loyalty is a very successful business strategy. It entails giving consumers value that extends beyond the product or service itself. It is often provided through incentive-based programs such as member discounts, coupons, birthday discounts, and points. Today, most businesses have some kind of incentive-based programs, such as American Airlines, which rewards customers with points for each trip they take with them.

Digital:

A digital strategy is a strategic management and a business reaction or solution to a digital issue, which is often best handled as part of a broader company plan. A digital strategy is frequently defined by the application of new technologies to existing business activities and a focus on enabling new digital skills for their company (such as those formed by the Information Age and frequently as a result of advances in digital technologies such as computers, data, telecommunication services, and the World wide web, to name a few).

Direct selling:

Direct selling refers to a situation in which a company's goods are immediately accessible from the manufacturer or service provider rather than via intermediate channels. The business avoids the retail margin and any extra expenses connected with the intermediaries in this manner. These savings may be passed on to the client, establishing a consistent sales experience. Furthermore, such intimate touch may help to strengthen client connections. Finally, direct selling benefits consumers by providing convenience and service, such as personal demonstrations and explanations of goods, home delivery, and substantial satisfaction guarantees.

On-demand economy:

The on-demand economy is described as economic activity generated by digital marketplaces that meet customer demand for products and services via quick access and accessible supply. The supply chain is managed via a highly efficient, intuitive digital mesh built on top of current infrastructure networks. The on-demand economy is transforming commercial behavior in cities worldwide. The number of businesses, the categories covered, and the industry's growth rate are all increasing. Businesses in this new economy are the culmination of years of technological progress and customer behavior change.

Experience selling:

An experience in the sales model describes how a typical user perceives or comprehends a system's operation. A product or service's value is enhanced when an extra customer experience is included. Visual representations of experience models are abstract diagrams or metaphors derived from recognizable objects, actions, or systems. User interfaces use a range of experience models to help users rapidly comprehend what is occurring in the design, where they are, and what they may do next. For example, a software experience model may depict the connection between two applications and the relationship between an application and different navigation methods and other system or software components.

Mobile first behavior:

It is intended to mean that as a company thinks about its website or its other digital means of communications, it should be thinking critically about the mobile experience and how customers and employees will interact with it from their many devices. The term is “mobile first,” and it is intended to mean that as a company thinks about its website or its other digital means of communications, it should be thinking critically about the mobile experience and how customers and employees will interact with it from their many devices.

Technology trends:

New technologies that are now being created or produced in the next five to ten years will significantly change the economic and social landscape. These include but are not limited to information technology, wireless data transmission, human-machine connection, on-demand printing, biotechnology, and sophisticated robotics.

Online marketplace:

An online marketplace (or online e-commerce marketplace) is a kind of e-commerce website in which product or service information is supplied by various third parties or, in some instances, the brand itself, while the marketplace operator handles transactions. Additionally, this pattern encompasses peer-to-peer (P2P) e-commerce between businesses or people. By and large, since marketplaces aggregate goods from a diverse range of suppliers, the variety and availability are typically greater than in vendor-specific online retail shops. Additionally, pricing might be more competitive.

Subscription:

Subscription business models are built on the concept of providing a product or service in exchange for recurring subscription income on a monthly or annual basis. As a result, they place a higher premium on client retention than on customer acquisition. Subscription business models, in essence, concentrate on revenue generation in such a manner that a single client makes repeated payments for extended access to a product or service. Cable television, internet providers, software suppliers, websites (e.g., blogs), business solutions providers, and financial services companies utilize this approach, as do conventional newspapers, periodicals, and academic publications.

eCommerce:

Electronic commerce, or e-commerce (alternatively spelled eCommerce), is a business model, or a subset of a larger business model, that allows a company or person to do business via an electronic network, usually the internet. As a result, customers gain from increased accessibility and convenience, while the business benefits from integrating sales and distribution with other internal operations. Electronic commerce is prevalent throughout all four main market segments: business to business, business to consumer, consumer to consumer, and consumer to business. Ecommerce may be used to sell almost any goods or service, from books and music to financial services and airline tickets.

Niche retail:

A marketing strategy for a product or service includes characteristics that appeal to a particular minority market segment. A typical niche product will be distinguishable from other goods and manufactured and sold for specialized purposes within its associated niche market. Niche retail has focused on direct-to-consumer and direct-to-business internet sales channels. The slogan for niche retail is Everything except the brand.

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