Peloton faces supply chain bottlenecks due to coronavirus

12 May 2020

A spike in demand for at-home fitness equipment has led to supply chain bottlenecks for Peloton. 

Jill Woodworth, Peloton’s chief financial officer, told investors total revenue had jumped by 66% year-on-year in quarter three, totalling $524.6m, as a result of the coronavirus pandemic. 

“We entered Q4 with a backlog of bike deliveries in all geographies and sales continued to surpass expectations into May. The unexpected sharp increase in sales has created an imbalance of supply and demand, unfortunately, causing elongated order-to-delivery windows for our customers. 

“While we are working to accelerate the supply of bikes and incurring higher costs in order to expedite shipments, we do not expect to materially improve order-to-delivery windows in Q4,” she said. 

Delivery has traditionally been a challenge for the firm, but less traffic and social distancing measures have allowed for more efficient delivery. However, these operational efficiencies were partially offset by costs associated with hazard pay for warehouse and delivery teams, Peloton said. 

Woodworth added supply chain constraints are the primary bottleneck for Peloton in Q4, rather than delivery capacity.

William Lynch, president of Peloton, explained Q4 has historically been a seasonally low period for the firm, which created the supply and demand imbalance. 

“We’ve worked quickly to expand within our existing facilities. If you look at what we’re producing today versus what we were producing in early March, we’ve been able to more than double the output,” he said. 

Lynch added Peloton was investing in a new factory in Taiwan and that will come online in December to help fill demand. 

In November 2019, Peloton announced it had acquired Taiwan-based Tonic Fitness Technology. It said: “Having greater control over our supply chain will enable us to strengthen and scale our production capabilities, increase innovation, and allow us to continue to deliver the highest quality connected fitness products in the market.”

 Want to stay up to date with the news? Sign up to our daily bulletin.

LATEST
JOBS
Cambridge, Cambridgeshire
circa £55,000
Cambridge Assessment
London
GBP60000 - GBP80000 per annum + Benefits
Bramwith Consulting
SEARCH JOBS
CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates
GO TO CIPS KNOWLEDGE