Peloton doesn't want my money

I love my Peloton.

And not as a bourgeois status symbol - but as a practical, well built piece of workout equipment.  When I had to give up impact cardio for health reasons, I was left with a handful of acceptable options, biking included.  Almost 7 years ago, I graduated to a Peloton & haven't looked back.  Here's why I like it: a super solid build, the content I need, and a leaderboard which keeps me motivated.  Our original Peloton bike is built like a tank, and is still ticking after all these years. Net-net, it's a pricey but a worthwhile investment.  And I get my money's worth - I use it almost daily.

About Peloton

Peloton burst onto the scene in 2012, with a novel interactive take on home workouts, and became the subject of adulation, aspiration, and, in some cases, hatred.  Notably, there was a PR fiasco with a 2019 commercial which came across as pretty sexist.  The pandemic became a boon to sales of home exercise equipment as people desperately looked for things to do and ways to stay in shape while stuck at home.  Turns out, however, the company grew too big too fast, and didn't anticipate the drop in demand - surprise, surprise - once the restrictions were finally lifted. It has since experienced management exodus, layoffs, retail & manufacturing shrinkage, and a hit to its stock price.

The products, however, remained solid, and it has a loyal user community, and there are still loads of new customers who want Peloton equipment.

Getting a used bike

Long story short, I found myself shopping for another Peloton bike.  Being the frugal shopper that I am, I started looking for used bikes.  Some of the obvious places - like Craigslist, OfferUp, or Nextdoor - have units for sale but the pickings are slim.  Luckily, I discovered a dedicated Peloton-only resale marketplace on Facebook where most people hang out.  A dedicated marketplace?  That's impressive.  How many of these are there for specific brands or products?  Not many.

What's also impressive is how vibrant and active this marketplace is.  On the supply side, there are a ton of people looking to unload their COVID bikes - purchased as a promise of attaining a high level of fitness during quarantine, but in many cases turned out to be barely touched. No judgement here - life often gets in the way.  This is great news, however, for people like me who are looking for second-hand bikes.  Assuming you do your research and have a little patience, you can land a sweet deal.  If you are lucky, you can even get a bike still under warranty... plus, Peloton allows you - even as a second-hand owner - to purchase a warranty extension called "Protection Plan", as long as it is within 12 months of the original delivery date.

Less suck

The bike I ended up buying was just a couple of weeks past that magic date.  So close!  Will I be able to  sweet talk Peloton into selling me that extension, because it was so close?  After all, the cutoff date is arbitrary, so why would another two weeks disqualify a barely used bike in mint condition?  I felt there was a chance.  So, I called Peloton and explained the situation.  I love you so much, I said.  I will name my next child Peloton.  Please take my money!

The response was a heartbreaking, gentle but firm "no".  I was just a few days past the cutoff date, with a barely used bike, and an open wallet.  It was a bummer.  But I also think it was a miss for Peloton. Mine is a perfect bike with just a handful of rides on it. I am a fanboy who mentions Peloton to others at least a few times a week. Violently loyal.  Daily user.  Plus, the truth is, I would have been willing to pay even more than the going rate for the Protection Plan.  That's right, I use the bike so much that makes that extra peace of mind worth it.  So, why or why would Peloton turn me down?

Product manager's thoughts

Generally, the reason for offering a warranty is obvious - provide buyers with a peace of mind, confidence, especially for higher priced items (state consumer laws may play a role, too).  The most common warranty period out there is 1 year, which is also the case for Peloton.  Unlike many other brands, however, Peloton does offer an option to purchase a warranty extension - as long as it is done within that 1st year.  That's awesome.  What sucks, though, is that if you are even a day outside that window, you are out of luck.

Why?  There could be a few reasons.  Over time, most products degrade and the likelihood of failure goes up - increasing the risk and, consequently, the cost of repair or replacement to Peloton.  Another interesting problem is called "adverse selection" - coined by clever economists, it means that you will get lots of owners with broken bikes buying the warranty extension because it's cheaper than buying a new bike.  This would, obviously, be expensive for the company.  Finally, complexity is a factor - gotta keep the policies reasonably simple so that customers can understand them; drawing a clear line in the sand at 12 months checks that box.

More awesome

Peloton can do better - to improve the customer experience and foster more violent loyalty.  And to increase revenue, which Peloton apparently can really use given their recent financial challenges.  They should be able to mitigate the additional risk by pricing the extended warranty on a sliding scale: the further out you are beyond the initial 12 months, the higher is the price.  This will also help better manage the costs associated with adverse selection... plus Peloton can raise the bar by requiring to see diagnostics information directly from the bike (which is Internet-connected), as well as a time-stamped video of the working bike, to filter out lemons.  Is it full-proof?  No, but might be good enough to make the additional risk acceptable for Peloton. Certainly, would be a win for customers like me.