A direct to consumer model that can barely keep up with demand

Roamy.
Roamy.
Jun 4 · 6 min read
Image credit: Chicago Tribune

Depending on how you look at it, spin bikes can be either eternally boring or thoroughly exhilarating. Traditionally, these indoor stationery exercise machines have been grandma infomercial purchases that end up as clever coat racks but, since 2012, an innovative fitness company has been on the rise rebuilding and transforming the fitness equipment industry piece by piece.


Peloton: Cutting Edge Fitness

Here is a fun fact about Peloton I didn’t know until I did some research on the company. The name isn’t just made up. A “peloton” is a thing.

So what exactly is Peloton? Good question. The company Peloton, as I’m sure you know already, but if not I’m sure you could have guessed by now, is a company that makes a really nice spin bike. And I mean a really nice spin bike. But the bike is not what causes all of the commotion for this company.

Peloton has (somewhat rightly) been called the Netflix of Fitness because it pairs on-demand, live-streaming trainer-led cycling classes (and now a host of other types of exercise classes) with a group fitness environment, and, as I mentioned, their hardware (the actual bike) is excellent as well.

In their own words, Peloton “has married sophisticated technology with beautiful and thoughtfully designed fitness equipment.”

Image credit: Peloton

Peloton’s Marketing Strategy: Direct to Consumer (B2C)

Question:

So, the bike is great and the classes are led by superstar trainers and the group environment encourages friendly competition which induces higher performance—but what exactly is so special about all this that allows Peloton to dominate the hundreds of better-funded, bigger-name competitors chasing after the same consumer’s attention Peloton is trying to capture?

Answer:

Direct to Consumer business model + really really great branding.

Functionality

If I were to try to sell you a spin bike with a tablet attached for $2,000 you wouldn’t care if it was Usain Bolt’s personal bike, you’re not going to buy it. Even if it came with unlimited classes taught by your favorite fitness guru you wouldn’t buy it. There is almost nothing I could pitch to you on the basis of functionality alone that would sell you a $2,000+ stationary bicycle.

Branding

But Peloton has not only sold this concept—they can’t keep up with demand.

Their direct to consumer approach has essentially turned the traditional fitness equipment sales industry on its head. Traditionally, the manufacturers of things like treadmills, ellipticals, and spin bikes marketed their products to gyms and fitness studios. They had never considered marketing to consumers directly because they really didn’t think anyone would want to own a treadmill or a stair master.

Where would one put such a behemoth of a machine? In their living room? That’s not cool. In their basement? No one wants to go down there and workout. It’s easy to see why the traditional business models of fitness equipment sales have been business to business (B2B) rather than Direct to Consumer, or what is referred to as B2C.

Peloton changed all that.

With their perfectly timed holiday campaigns and sexy social media rollouts, Peloton knows how to market to consumers in a way that is refreshing and accessible. Their instructors are high energy and the classes do actually make you feel connected to the community within the screen. When you’re cycling and bent over what is essentially an iPad, the screen takes up your entire field of vision and the music oscillates through your whole body—it’s hard not to get wrapped up in all of it. Needless to say, Peloton is as good at crafting a marketing campaign as they are at designing a great customer experience.


Competition: FlyWheel & SoulCycle

SoulCycle (left) and FlyWheel (right)

In the beautiful land of the free market economy, where this is a blue ocean, sharks are sure to follow. There were two major competitors in the spin class space prior to Peloton’s inception in 2012. SoulCycle (now owned by Equinox) was founded in 2006 and FlyWheel was founded in 2010.

SoulCycle and FlyWheel both follow the same marketing strategy. That is, the classes are marketed to gyms and then, through gyms, they reach consumers. This is known as a B2B2C (business to business to consumer) model.

How SoulCycle and FlyWheel differ from each other

The main differentiator between FlyWheel and SoulCycle is the kind of member the class attracts. FlyWheel members tend to be on the more serious athlete side. They always seem to be looking to out-compete each other. On the other end of the spectrum, SoulCycle members always look like they’re having a great time. SoulCycle instructors have been known to call their classes a “party on wheels” and if you didn’t know better, you might think you were in a nightclub rather than a fitness studio during some of the classes.

Everyone wants in on the Direct to Consumer game

FlyWheel released a physical bike product with features like “at home livestreaming” and “on-demand content” that are similar to Peloton’s, and, obviously, their in-person in-gym classes compete with SoulCycle classes.

This streaming content initiative is called Fly Anywhere.

Image credit: FlyWheel

FlyWheel CEO Sara O’ Hagan describes the difference between the Fly Anywhere concept and Peloton’s core at-home bike product concept as being one of convenience.


The Future

FlyWheel and SoulCycle have something that Peloton doesn’t. Physical studios. Even though the entire point of a direct to consumer business model is to skip the middle man (the gym in this scenario) and bring the product directly to the consumer, the advantage of having both an at-home bike product and a physical studio location that is convenient to a member is the ultimate package. Physical classes contribute to member engagement and tribe building in a way that Peloton virtual classes can’t.

Even if Peloton wanted to build physical studios, they cannot compete with the existing physical location spread of SoulCycle and FlyWheel (not to mention the other hundred boutique spin studios that are popping up all over the country) at this time. This fact, however, doesn’t seem to be deterring Peloton from trying, as the company has opened its first physical studio location in New York and it is rumored that there are several other physical studio location plans being drawn up for other major metropolitan areas.

Peloton changed the way stationary bikes are marketed and sold—and that’s something we can all learn from.

Better Marketing

Advice & case studies

Roamy.

Written by

Roamy.

@RoamyWrites on Twitter. Launching my own business- strategy for entrepreneurs: https://www.quantified.coach/

Better Marketing

Advice & case studies

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