In our previous blog, we did a comprehensive study on the SWOT Analysis of India’s largest car manufacturer, Maruti Suzuki. Here we will understand the SWOT Analysis of Peloton.
Peloton is a big name in the home fitness industry as it has 5.4 million users across the US, Canada, Germany, Australia and the UK. Peloton was founded in 2012 with the intention to bring talent in technology, hardware and production together combining community and eagerness of boutique fitness into the home.
Sales of peloton hyped in the pandemic from $714 million to $1.82 billion to 4.02 billion in 2019, 2020 and 2021 respectively. Marketing is one of the key factors that made Peloton successful and as the world goes online, digital marketing is the future of marketing. If you want to be future leaders – Check out Free Masterclass on Digital Marketing 101 by the CEO and Founder of IIDE, Karan Shah.
In this case study, we will learn about the SWOT analysis of Peloton. But first, let us know about the company and the product better.
Peloton is a New York-based company operating since 2012. With the mission to connect the world through fitness, Peloton combined design and technology and empowered people to be the best version anywhere, anytime.
Peloton first launched and sold its bike in 2013 on Kickstarter with an early bird price tag of $1500. It is a stationary bike company that gives instructor-led workouts without stepping foot in a gym.
John Foley, co-founder and CEO of the company in 2011 pitched to his colleague the idea that technology could make it possible for people to get the full experience of working out in high-end studio cycling classes in their homes. The peloton flagship product, stationary exercise bike includes access to the Peloton app & classes.
|No. of Employees||3635+|
|Market Cap||$10.38 Billion|
|Annual Revenue||$4.02 Billion (2021)|
|Net Income/ Profit||$180.9 Million (2021)|
Products of Peloton
Peloton has been in the industry for 10 years and is dealing with the products such as:
- Peloton Bike
- Peloton Tread
- App and Classes
Competitions of Peloton
As Peloton is described as “Netflix for Fitness”, many players came into the market to compete with Peloton. The top 5 competitors of Peloton are:
- Flywheel Sports Inc.
Now, we know the brief of the company, what it is, what it does and the relevance of its existence. Let us dive into the SWOT Analysis of Peloton.
SWOT Analysis of Peloton
A SWOT analysis examines the strengths, weaknesses, opportunities, and threats that a firm faces. SWOT Analysis is a tried-and-true tool that enables a company like Peloton to compare its business and performance to that of its competitors.
It will give us a strategic analysis of its internal and external environment, which is crucial for understanding the SWOT Analysis of Peloton.
To better understand the SWOT analysis of Peloton, refer to the infographics below:
Below is an explicit guide to the SWOT analysis of Peloton.
Strengths of Peloton
Peloton, being one of the leading companies in its industry, has several benefits that help it flourish in the marketplace. These strengths not only help it retain market share in existing areas but also help it break into new ones.
- Brand Recognition: Peloton has established its brand in the fitness industry as being the pioneer to enter the market. It has more than 5 million users across 5 countries it operates.
- Strong Product: It provides customers’ needs in a unique way. It combined hardware and software, fitness equipment and fitness training in one set.
- Multi-Device Access: With one subscription, users can enjoy multi-device access for families by listing different accounts. Customers can choose to subscribe to digital membership for training only.
- Huge Loyal Customer Base: Peloton has over 5.9 million users on its platform with 2.3 million connected fitness subscribers. It had an over 92% of annual retention rate on its subscription packages.
- Strong Customer Relationship: From the year 2012, Peloton has developed good relations with its customers and due to that, they have reached the majority of its potential market by providing amazing fitness products and fitness motivational classes.
Weaknesses of Peloton
Peloton’s weakness is an area where he can improve. Strategy is about making important decisions, and weaknesses are areas where a company could improve with the help of a SWOT analysis.
- Narrow Product Range: It has only two fitness training, hardware products in comparison to its competitor: bike and treadmills with two varieties. Its accessories and apparel range are very limited compared to its competitor.
- Reliant on Third Party: Since the products consist of a digital dashboard and different functions, Peloton depends on third parties for services such as musical content, logistics and suppliers. They lack control over third parties compromising on their operations, quality, efficiency.
- Limited Market: Peloton only exists in the US, UK, Canada, Germany and recently in Australia. Though they have high customer retention they are not able to extend in large markets by which Peloton has limited markets.
- Branding & Marketing: Peloton comes into different controversies of patent and copyright of things to its competitors. It tangled with Flywheel and paid $59 million in legal settlement and fighting recently with Echelon Fitness & Icon Health Inc.
- Competition with Brands Affecting the Market: Although Peloton has a unique marketing strategy the new brands and other existing brands are also coming up with new strategies. But to maintain the position of best fitness products they need constant advertising, improvement in their products and this causes the majority of the expenses of the brand.
- Limited International Presence: Peloton currently operates in only five markets around the world. It should consider operating in other countries, to expand its business and create strong brand recognition and awareness in the market.
Opportunities for Peloton
Opportunities are possible areas for a company to consider to improve results, sales, and, ultimately, profit. Peloton includes the following opportunities:
- Geographic Expansion: Opening its branch or franchise globally helps Peloton to expand its marketplace. There are many people in the world who need the solution provided by Peloton and replicate it in the market with some personalization.
- More Product Range: It had the opportunity to improve and innovate the range of equipment, apparel, accessories and training in the marketplace.
- Strong R&D: Research and development is an integral part of any company, especially tech companies and with less product differentiation and huge competition, it seems that Peloton needs R&D for product differentiation and Human-Centric Design.
- Using First Mover Advantage: Instead of fighting with competitors, they can position themselves as a pioneer and quality brand. Launching new products before the market is an addition.
- New Technology: Peloton may now use differential pricing in the new market thanks to the new technology. It will motivate the company to reinforce its existing clients via excellent service while also attracting new customers through various value-oriented offers.
Threats to Peloton
Many factors can affect your business outside its immediate environment. Some of these include factors such as a shortage of skilled workers or a supply chain issue. The threats Peloton is facing are as follows
- No Barrier in Entry: As they have no registered patent, anyone can enter and copy their product. They have already fought legally with 3 companies and also lost money. They have not maintained the first-mover advantages by which their competitors are the biggest threat.
- Stiff Competition: Company heavily relies on sales of bikes and treadmills and numerous brands are dealing in the same category.
- Financial Risk: Peloton has not been able to make a profit though it went public. Analyzing the yearly reports of peloton seems always in loss which can lead the company to collapse.
- Dependent on Products: Most of its revenue comes from the product rather than subscription since they have limited product and geographical region and high competition. Declining sales of its product lead to a decline in revenue.
This ends our elaborative SWOT analysis of Peloton. Let us conclude our learning below.
Peloton is a well-known brand in the fitness industry with a presence in more than 5 countries. SWOT analysis is very important for companies to know where they exist and how far they can go. With the detailed SWOT analysis of Peloton, we observed it has a large loyal customer base with more than 80% retention.
With having that strong customer base, competitors are the biggest threat and the need for R&D in the company is seen for its growth. Marketing and branding of the company is also the key important thing for the growth of the company.
Competition is everywhere be it automobile, mobile, or fitness. Peloton is a great mixture of high-end technology, innovation and amazing social experience. In a time, when digital marketing is of utmost importance, excelling in the field is a must for all enthusiasts of marketing. If you don’t have any idea of what digital marketing is or want to learn more about it and upgrade yourself, here is IIDE’s 3 Month Advanced Online Digital Marketing Course to know more.
We hope this blog on the SWOT analysis of Peloton has given you a good insight into the company’s strengths, weaknesses, opportunities and threats.
If you enjoy in-depth company research just like the SWOT analysis of Peloton, check out our IIDE Knowledge portal for more fascinating case studies.
Thank you for taking the time to read this, and do share your thoughts on this case study of the SWOT analysis of Peloton in the comments section below.