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Peloton is switching gear to try and cut its costs, with a plan to use Apple’s suppliers and other external firms to construct its fitness products rather than relying on its own factories.
Peloton has been struggling to keep costs down amid talks of a potential buy-out or investment from a major company like Apple or Amazon. In its latest bid to reduce its outgoings, the firm is apparently turning to companies that work with Apple in assembling products.
Instead of splitting manufacturing between its own facilities and partners, Bloomberg reports it will stop production at facilities acquired in 2019 in favor of relying solely on third-party firms. Work performed by facilities operated by subsidiary Tonic Fitness Technology will instead be solely performed by existing partner Rexon.
“We are going back to nothing but partnered manufacturing,” said Peloton chief supply chain officer Andrew Rendich. “It allows us to ramp up and ramp down based on capacity and demand.”
Rendich reckoned that having dual supply chains required more resources, and so a simplification to an external-only approach could both cut costs and improve product quality.
Along with going down the same route as Apple for its main manufacturing efforts, Peloton is also working with firms that exist in Apple’s supply chain. It already works with Quanta Computer on touch screens for its workout devices, but it’s also tapping Pegatron Corp for its rowing machine.
The shift in strategy is the latest move by Peloton to try and improve its standing. After financial woes resulted in reports it was a potential acquisition target, the fitness equipment maker then moved to right the ship.
This included a major shakeup in February involving a new CEO and the laying off of 2,800 employees, and in April, a considerable cutting of prices on hardware at the same time as increasing subscription fees.
