Peloton's rapid ascent to becoming a must-have home fitness accessory has caused major delivery delays that are angering new customers. The company's now spending big to fix that.
CEO John Foley said Peloton is "putting our money where our mouth is" with a $100 million investment to speed up deliveries, including improving its air and ocean shipping and doubling the size of its customer service support team to help assuage anger.
Peloton, which reported $1 billion in quarterly sales for the first time late Thursday, blamed the delivery problems on port delays on the US West Coast and the pandemic that prevented the company from returning to "normal order-to-delivery wait times" that forced it to reschedule many deliveries.
Demand for its popular line of fitness products, like its $1,895 stationary bike, has caused delivery times to stretch as long as eight to 10 weeks — more then double the amount it took before the pandemic.
Some customers online have complained in recent months that Peloton has not told customers how long the delays will last. And competitors, like SoulCycle's at-home bike, advertises its much shorter delivery window of just a week.
"To address this issue, we will continue to invest heavily in systems, teams, and manufacturing capabilities to ensure we don't disappoint our customers going forward. Importantly, we are going to do everything we can to get back on the right side with our new members," Foley said on an earnings call.
The investment will decrease its near-term profitability, which sent the stock sliding 7% in premarket trading. Shares are up 370% since last February.