Last year, we covered the Peloton supply chain woes, and in 2022, the saga continues, and Peloton’s supply chain problems continue.
In this article, we discuss Peloton’s current supply chain problems and predict what’s next for the business that was once among America’s most booming enterprises.
When discussing Peloton, the question of the day seems to be a shock, “What the heck happened?” According to the managing editor of Modern Shipper, Brian Straight, it all came down to a gross mismatch—and resulting gap—between rising demand and dwindling supply, with a little bit of a logistical nightmare on the side.
Straight explained Peloton’s current predicament: “As demand for products jumped, shrinking freight capacity slowed customer delivery, and now Peloton is playing catchup.” Not only is the company scrambling to catch up, but customers are not happy. They are bordering on livid. Let’s explore just what led to the supply chain snafu.
At first, the COVID-19 pandemic seemed to have provided a super boost for sales and revenue for Peloton. And while technically, this is true that sales skyrocketed. The company reported a 128% revenue growth for its fiscal Q2 2021 and earnings per share of 18 cents versus an expected 9 cents, with its revenue surpassing $1 billion, reaching $1.06 billion versus only $466.3 million the year prior.
But not so fast—the clouds started to gather as the combination of port congestion and these very same skyrocketing sales proved to be too much for the already stressed Peloton supply chain. A perfect storm of supply chain chaos ensued, resulting in Peloton’s stock plummeting overnight.
Sadly, this is not an uncommon occurrence, with the market having seen all too often how dynamic revenue growth can derail your supply chain. The bottom line is this: Peloton’s supply chain is broken, and consumers are bringing out the pitchforks.
Currently, the best way to put it is that Peloton is in the middle of a massive apology media campaign—one which finds company CEO John Foley promising an investment of a whopping $100 million in expedited shipping in an attempt to help remedy the problem. How specifically? To speed up the delivery of its products to buyers’ front doors (or home gyms).
In Foley’s words, “West Coast port delays and COVID-related delivery challenges have prevented us from returning to our normal order-to-delivery wait times and unfortunately forced us to reschedule many deliveries.“ He went on to promise, “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.”
Going forward, we have to wonder what is next for Peloton. While it could seem like the fitness company is done following such a public supply chain fiasco, according to an article recently published in The Motley Fool, we shouldn’t count Peloton out just yet. The reverse is predicted, with the publication mentioning several positive factors that point to a bright future for Peloton. Namely, Peloton’s user base continues to grow, new Peloton products are hitting the market nearly every day, and Peloton stock is still considered to be a great stock with staying power long-term.
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