Furious Peloton members are skewering the company's delivery partner over broken $2,000 bikes and scratched hardwood floors - and the company is starting to take note
- The popular fitness company Peloton has a social-media problem - and it comes down to its delivery provider, XPO Logistics.
- Peloton members are complaining about their experiences with XPO, alleging that their homes and exercise equipment were damaged when the logistics giant performed Peloton deliveries. Other members say they had good experiences with XPO.
- Current and former employees said the company is aware of the problem. The stakes are high. Peloton is aiming to go public, and in its recent S-1 filing, said "if we do not help our Members quickly resolve issues and provide effective ongoing support, our reputation may suffer."
- The problems are also alienating future and current Peloton members who are in XPO's delivery zone. One prospective customer wrote on Facebook that he has "existential dread" about his upcoming XPO delivery.
- XPO stands by its delivery service, citing data provided to Business Insider, which claims 94% of customers with Peloton deliveries fulfilled by XPO in May and June 2019 said in a post-service survey that they had a positive experience. And 96% received their deliveries on time, according to the data.
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Todd Mitchell loves his Peloton. He didn't love the gummy grape candy that he said ended up stuck to his $4,295 treadmill during the delivery process.
Peloton charges $250 to deliver its bike and treadmill and promises "white-glove" service. The exercise equipment company, which provides streaming fitness classes for customers called "members," filed with the Securities and Exchange Commission to go public on August 27.
The banged-up hardwood stairs that the $250 delivery service brought struck Mitchell as a safety hazard for him, his wife, and his four-year-old daughter. "Every time I walked by it I thought, 'Jesus, this is going to kill someone,'" Mitchell said. "Even if it didn't, I've had hardwood splinters in my foot before, I don't recommend it."
After that delivery experience, Mitchell went to the Peloton Reddit page, where some 17,700 Peloton members gather to meet new workout partners, discuss progress, and swap ideas on post-workout drink recipes. He also looked at the many Peloton Facebook groups, including the official member group that has nearly 190,000 members. (There are around 500,000 active Peloton subscribers.)
That's when Mitchell and his wife learned that Peloton members nationwide weren't just comparing notes on Peloton workouts - they were trashing the company's delivery partner, XPO. It turned out, Mitchell's damaged home, repairs for which XPO ultimately paid, was not unusual.Peloton's in-house delivery service ships its pricey bikes and treadmills near major cities. The company says 58% of its shipments are performed by its in-house team. Outside of urban hubs, a company called XPO Logistics handles the deliveries. XPO also uses subcontractors to deliver bikes and treadmills in some cases.
Peloton, which is in its quiet period, did not provide a comment for this story.
"We facilitate thousands of deliveries every year for Peloton and nearly all of them are seamless," XPO spokesperson Joe Checkler told Business Insider in an emailed statement. "A very small percentage of the time, things don't go as smoothly and customers understandably post their complaints online. We relentlessly focus on improving the customer experience, and know that all that matters to the customer is their delivery."
Within Peloton's online communities, complaints about XPO are so common that members who have good experiences with the company write as though they're taken by surprise.
However, internal XPO data indicates that positive delivery experiences are the norm. According to XPO data provided to Business Insider, more than 90% of customers with Peloton deliveries fulfilled by XPO in May and June 2019 said "yes" to a one-question, post-service survey that they were "completely satisfied" with their experience. That's out of nearly 9,000 respondents to a survey from 25,000 deliveries. Of all XPO deliveries at that time, slightly fewer customers, but still above 90%, said yes to the same question. XPO declined to provide more specific numbers on the customer satisfaction survey.
XPO data indicated that its deliveries of Peloton equipment were on time 96% of the time during May and June. XPO's overall last-mile delivery timeliness was also 96% during that period.
There are a few common threads in the negative XPO stories on Peloton's online communities:
- Late deliveries
- Poor communication
- A lack of set-up
- Destroyed bikes or homes
Holly Pederson, a lawyer who lives in a small town in Washington state equidistant to Seattle and Spokane, said her Peloton bike, a new Pottery Barn desk, and her hardwood floors were damaged after an XPO subcontractor delivered her Tread earlier this year.
In lieu of an apology, Pederson received a $20 Amazon gift card from the XPO subcontractor.
Some Peloton members say the XPO onslaught has changed their perception of the company
XPO may not be a household name À la UPS or FedEx, but it's a huge player in warehousing, deliveries, and other freight offerings. Raking in more than $17 billion in revenue last year, XPO was one of the largest logistics companies in America.
And on Peloton's active online community, XPO is frequently name-dropped. Many Peloton members who live outside of Peloton's delivery area shared with Business Insider that they were hesitant to buy a bike or treadmill from the company due to the barrage of negative experiences with its shipping partner seen online.
"My bike is slated to be delivered next week by XPO," one member wrote in an August Facebook post on the official Peloton page. "A quick search of this group has filled me with existential dread about that delivery."
Because of these online reviews, Justin Castelli, an Indianapolis, Indiana-based financial advisor, told Business Insider that he was initially doubtful the XPO delivery of his Peloton would be problem-free. But, "I've had it since November, and knock on wood there hasn't been any problems so far," he said.
The XPO outrage has also convinced some Peloton members to not buy additional equipment. Des Moines, Iowa, resident Thomas Rinehart said he had a bad Peloton bike delivery. By his account, Reddit post after Reddit post showed him it wasn't a one-off incident."Everyone says, 'If you have XPO, you're just going to have a crappy experience," Rinehart told Business Insider. "I'd really love to get the Tread, but my experience with XPO was so bad that I can't even bring myself to order it."
Current and former Peloton employees told Business Insider that the company is aware of the online backlash because it's resulted in so many demands for refunds and returns. Peloton is pressured to refund the hefty "white-glove" delivery fee and provide a slew of other freebies when the transportation is botched.
"They know it's an issue," a current employee told Business Insider. "They see the complaints. We all know about Facebook and other social media outlets and things of that nature. Their main focus is to cut down on that because of the costs - refunds, things of that nature."
Peloton isn't just a fitness company - it's a social network
Peloton's online community is a major part of why people spend thousands of dollars on one of the company's fitness bikes and treadmills. The company has an impressive 95% 12-month retention rate, to which observers in part credit Peloton's tight-knit social groups.
"As our community of Members continues to grow, the Peloton fitness experience becomes more inspiring, more competitive, more immersive, and more connected," Peloton wrote in its S-1. "Over time, Members are embedded in the Peloton community and we become a part of their lives, increasing the opportunity cost of Members leaving or potential Members not joining our platform."
Castelli, the Indianapolis-based Peloton user, put it more succinctly: "I drank the Kool-Aid."
That explains the endless list of Peloton Facebook groups that seem to fill every niche - Peloton moms, Peloton moms who are doctors, black Peloton moms who are doctors, Peloton Jews, Peloton single dads, Peloton horse lovers, Peloton fans of true-crime podcasts, and so on.
That tribe is especially important for those outside of coastal hubs, where fitness enthusiasts can't access exercise studios like ClassPass or Equinox. "That's the biggest selling point for most people. (Peloton classes) are a blast," Rinehart said. "You've got music pumping away, someone who is much more gorgeous than I will ever be telling you what to do - you get all of those fun aspects of a spin class and you put it right in someone's house.
"You have this social connection," he added. "You just have a lot of really nice people."
'Word of mouth travels like crazy,' and Peloton employees are on edgePeloton's S-1 filing revealed details on how the company has become a fitness "phenomenon" since its founding in 2012. Each month, half a million members stream Peloton's available workouts. They paid a total of $181 million in subscription fees in the first half of 2019 alone on top of the cost of their Peloton bike or treadmill, which start at $2,245 and $4,295 respectively. The filing also showcased a company that's growing remarkably quickly.
Peloton is expanding its delivery and in-home repair service. An analysis from Thinknum Media indicates that, in August, Peloton posted 153 new roles - out of 393 jobs total - in field operations across 37 cities in the US, Canada, and the UK. Some of those active openings are in majors hubs like Houston and Los Angeles, while others are based outside of Peloton's normal delivery area - like Vernon, New York, a village of 1,100 some 38 miles from Syracuse, New York, and Billerica, Massachusetts, a town 24 miles northwest of Boston with 40,000 residents.
The company bills itself in its S-1 as a "logistics" company. That comprises "professional high-touch set up service and ongoing in-home service and care" and "experts" who "offer product education, assistance with account set up, and tips and recommendations for product care and content selection." Peloton delivers 58% of its own bikes and treadmills.
Meanwhile, using XPO and other third-party services appears to be a move to expand its reach and save money. Peloton says partnering with XPO "allows us to reduce order fulfillment time, reduce shipping costs, and expand our geographical reach."
Peloton's S-1 notes that an "unsatisfactory experiences with the delivery, installation, or service of our Connected Fitness Products" may result in failing to attract or retain customers.It also alludes to social-media complaints about deliveries (emphasis ours):
Providing a high-quality Member experience is vital to our success in generating word-of-mouth referrals to drive sales and for retaining existing Members. The importance of high-quality support will increase as we expand our business and introduce new products and services. If we do not help our Members quickly resolve issues and provide effective ongoing support, our reputation may suffer and our ability to retain and attract Members, or to sell additional products and services to existing Members, could be harmed.
This writing echoes what several current and former Peloton employees, who spoke to Business Insider anonymously, have said about working at Peloton.
Many of the complaints, employees said, surround the gap between a "white-glove" delivery service Peloton promises - and charges for - and the reality of the delivery experience, particularly when provided by XPO or one of that company's subcontractors.
"Peloton's whole goal was to provide white glove experience on all customer experience," one former employee told Business Insider. "It wasn't white glove."
Several Peloton workers and members said, to make up for that, poor delivery experiences often result in replacement of equipment, free Peloton "goodie bags," one or several months of free Peloton classes (the monthly subscription fee is $39), or a refund of the $250 delivery fee.
"(XPO) really puts a bad name on Peloton even though it's a third party vendor," a current employee told Business Insider. "Word of mouth travels like crazy."
For that reason, Peloton appears poised to move more shipments from XPO and its subcontractors to its internal network. "As we grow our logistics network, we are able to efficiently service, deploy, and install replacement parts to our Members over time," it writes in its S-1.Peloton's new public filing underlies other bold moves for the fast-growing company, including a recent expansion to several markets in Canada the United Kingdom. That speedy surge raises questions for Rinehart, the Iowa-based Peloton member.
"I want Peloton to be infinitely successful but at the same time I want them to change their practices," Rinehart said. "They talk about growing to Canada and the UK and you sit there and think, 'I can't even get a bike delivered in Des Moines, Iowa.'"