How important is the Peloton Tread?
How important is the new less expensive treadmill to Peloton and what might it add the bottom line?
Peloton announced the introduction of the new lower priced Tread in February, starting at $2,495 compared to the original Tread+ which is priced at $4,295.
Likelihood to purchase other Peloton products
From my survey of Peloton members it was clear there was a desire to buy additional Peloton products and the Tread seems like a great addition to the Peloton product family. However, it’s a very different product to the bike for a few reasons.
Price comparison versus competitors
The latest Peloton Tread is priced at the lower end of comparable treadmills. Peloton Tread has some significant features that make it stand out from its higher priced rivals such as a large screen and convenient buttons to increase speed and elevation. The Peloton Tread+ was priced toward the higher end of the scale which still makes it attractive but the new Tread is priced to boost adoption and make it a viable alternative to the bike or a great addition if members purchase both.
Required footprint limits potential
To demonstrate just how much space is recommended for the Tread, I drew a scale diagram below. Next to the Peloton Tread is a Super King bed for comparison.
The Tread's dimensions are 173cm L x 84cm W x 157cm H. Additionally, you will need at least 2 m of clearance directly behind the Tread and 60 cm of clearance on either side.
Not many members are going to stick to the recommendations, particularly the 2 meters of clearance behind the Tread and perhaps less at the sides, but comparing it to a Super King bed, you realise just how much room a Tread takes up in the home. It doesn’t fold away and will therefore takes up a significant space even when not in use. It’s encouraging that many Peloton members are affluent and have ample room, but 53% live in homes with three rooms or less. So it’s definitely a limiting factor to adoption.
Noise levels
Noise levels for the Bike and Bike+ are extremely low, producing less than 20 decibels which is the same as whispering. In contrast the Tread produces more noise due to the weight of a person contacting the belt. Depending on your size and weight will contribute to noise levels. The average noise from the Tread is 93 decibels, which is a similar level to a hair dryer (see the diagram below). That’s not something you can use in a family home unless you’ve got enough room to isolate the Tread, limiting its appeal and options of where it can be stored. You wouldn’t want to live in an apartment and use the Tread unless you have understanding neighbours. Equally, it’s more preferable to being stored downstairs or in a basement/garage.
Calorie burn: running versus cycling
One of the major benefits for using the Tread will be efficiency. You can burn more calories running compared to cycling. Below I compare a one hour running workout at 8 mph and a 180lb person versus cycling at 16-19 mph. It’s pretty appealing when convenience is a big factor for in-home fitness.
Running inside versus outside
Peloton members reported that in the majority they don’t cycle outside with 58% of members never cycling outside with only 31% occasionally cycling. It’s a fair assessment then that the alternative to the Tread of running outside is unlikely. Peloton is an engaging platform and people will use the Tread indoors versus outdoor running. It’s more convenient and safer to run indoors for many members.
What’s the size of the opportunity with its existing base?
Given all the limiting factors it’s clear the lower priced Tread has more limited appeal compared to the Bike and Bike+. But there’s still a large group of Peloton members that it does appeal to. Here’s how I’m assessing the likely take-up and potential size of the opportunity:
Peloton has 1.33 million connect fitness members
Members that would buy additional Peloton products (67%) = 891,000
Members excluded due to lack of space (47%) = 418,817
Noise levels limit appeal (25%) = 104,704
Percent of base that may purchase the new Tread 7.9%
Or, 104,704 existing customers likely to buy the Tread
That’s over $240m of additional revenue (hardware only) if Peloton can convert them
Incentives for existing members will boost conversion numbers
Where next for Peloton?
The acquisition of Precor could lead to many new product areas. Arguably most anticipated is the rower which would work for households where space is limited. The rower can be stood up and stored away when not in use. Given Precor’s other product lines all gym equipment could be translated to the home Peloton environment. Elliptical trainers, sometimes called cross-trainers, could be an additional product line. They’re a similar size to the bike, also quiet and low impact on the joints, compared to treadmills. The only major limiting factor for additional products is the space necessary to store them.
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