(Bloomberg) -- Peloton Interactive Inc. said it will sell bikes and certain accessories on Amazon.com Inc. in the US, breaking with a longtime practice of exclusively selling products via its own website and retail stores.
The move to open a storefront on Amazon’s sprawling online marketplace will help Peloton expand its distribution and make products more readily available, the New York-based company said in a statement Wednesday. Peloton shares rose 12.4% in New York.
Chief Executive Officer Barry McCarthy, a tech veteran who took the helm in February, is trying to turn around a business that thrived during the early days of the pandemic but slowed drastically in the past year. He’s looking to reinvigorate sales, boost efficiency and restore some of Peloton’s former cachet.
“Peloton’s retail partnership with Amazon.com in the US broadens its reach, though we don’t think of this as a precursor to M&A,” said Geetha Ranganathan, a Bloomberg Intelligence senior media analyst. “The pact should help boost Peloton’s top line but, more importantly, trim distribution costs and help it turn free cash flow positive in fiscal 2023.”
In another effort to goose sales, Peloton is redesigning its bikes so customers can assemble them at home and will explore letting users beam its content to rival workout machines.
The fitness company earlier this month announced plans to lay off about 800 workers, raise the prices of its equipment and outsource deliveries and some customer service functions. It’s also looking to wind down much of its retail footprint in North America starting next year.
It’s not hard to see why Peloton chose to sell its wares on Amazon. The Seattle-based company has a commanding position in online retail in the US. Insider Intelligence estimates Amazon will account for 38% of US retail e-commerce sales this year, with Walmart a distant second at about 6%.
“Expanding our distribution channels through Amazon is a natural extension of our business and an organic way to increase access to our brand,” Kevin Cornils, Peloton chief commercial officer, said in the statement.
(Updated with shares, analyst’s quote in fourth paragraph.)
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