Peloton’s vertical integration and explosive growth in 2020
Peloton drove the pandemic high due to increasing demand for workout-at-home. Will this trend continue in the future?
Founded in 2012, Peloton is an American exercise equipment and media company. Peloton Digital App is equipped within every Peloton stationary bicycles and treadmills. Thus, Peloton can provide thousands of on-demand exercise classes to its monthly subscriber (HBS, 2020). Peloton’s subscription-based business has seen a surge in demand due to government stay at home orders caused by the 2020 pandemic. The objective of the company was to capture a dominant share in the emerging market of at home fitness by providing a complete on-demand work-out experience.
Peloton chose to vertically integrate to control every aspect of an at-home fitness experience. Peloton produces its own hardware — bikes or treadmill, develops and maintains its digital platform which houses all of the workout content. In October 2019, Peloton acquired Tonic Fitness Technology, a Taiwanese manufacturing company for $47.4 million. In December 2020, Peloton acquired Precor, a home and commercial-grade workout machine manufactures for $420 million. These acquisition signal backward integration to improve manufacturing of Peloton equipment to keep up with…
