You may have heard of Peloton’s recent acquisition of Precor. It was a $420 million deal and Peloton’s largest acquisition to date.
This acquisition was particularly interesting, not only because of the price tag associated with it but also due to the strategic reasons behind it which are admirable.
1. Peloton’s Ability to Keep Up
If you’ve tried ordering any type of exercise equipment since the advent of the pandemic, it’s likely you’ve dealt with, well, at least a little wait! Three, six, and even eight-month wait-times weren’t the exception, but often the rule during the pandemic.
While things have become a little better, the shift to more and more remote work in the last 12 months and the closing/restrictions of many gyms in the country have made home gyms and exercising from home more popular than ever before.
This, of course, has created more demand than companies like Peloton can keep up with.
Peloton had a choice. They could’ve stuck with a pre-pandemic strategy and just attempted to fulfill as many orders as possible, knowing full well that they’d have a long line of customers waiting unreasonable amounts of time to get products, or they could roll up their sleeves and find a solution. Thankfully, they chose the latter.
Peloton’s acquisition of Precor allowed it to increase its manufacturing abilities, fulfill orders quicker, and “wipe out” the competition at the same time.
2. A Sense of Fearlessness
It’s no secret that many industries actually benefited from the pandemic. It was, in fact, a good time to be selling hand sanitizers or toilet paper.
While home fitness was one of those definitive industries that saw great growth rather than decline at the advent of COVID-19, today’s market remains largely volatile and unpredictable.
You have to give credit to Peloton’s ability to act strategically here. They could’ve chosen the “safe route” and “stayed the course” to wait out the pandemic at their customers’ expense. In other words, they could’ve had a “tough luck” attitude with their buyers and simply accepted that their buyers would have to wait.
However, they chose the route that brought more value to their customers by reducing wait times, and they’re now reaping the fruits of this decision.
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