Peloton has had one of the most eventful five years in tech. The home fitness company experienced industry highs and lows in dizzying succession. This is the story of a buzzy startup that grew into a cult following among influencers and fitness enthusiasts. A global pandemic catapulted the brand to unknown heights, only to then see it plummet back to earth amid overinvestment, recalls, mass layoffs, and executive departures.
As of mid-2024, Peloton is in decline but not bankrupt. The company avoided a major liquidity crisis with a major debt refinancing in late May, the same month it cut 15% of its workforce and saw CEO Barry McCarthy step down after just over two years in the role after succeeding founder John Foley.
Peloton's high-profile, roller-coaster ride has had far-reaching ripple effects. Excitement was at a fever pitch during the peak of the pandemic, but sales plummeted as the world began to reopen. Some people who got hooked during the peak of social distancing have remained loyal to the brand; many others, however, have lost that connection. While some customer churn is inevitable for any fitness service, the reopening of gyms and other exercise alternatives has undoubtedly exacerbated these numbers.
The result is a mountain of unused, expensive fitness equipment taking up space in homes across America. They've now become, as a colleague recently called Peloton bikes, “clothes racks.” A quick search on Facebook Marketplace turns up row after row of exercise bikes, often for sale for $300 to $500; that's just a fraction of the price of new models (around $1,500). For many of their once-enthusiastic owners, the equipment has become a liability. But for two East Coast entrepreneurs, it's an opportunity.
Trade My Spin had its humble beginnings when current CEO Ari Kimmelfeld began looking to buy used Peleton bikes cheap. While the prices on Facebook and Craigslist were cheaper than buying new from the manufacturer, the experience came with its own challenges.
“It was a huge inconvenience to buy something that bulky,” Kimmelfeld, who worked at EY-Parthenon, Ernst & Young's strategy consulting division, told TechCrunch at the time. “$500 is a lot of money, and you're paying for equipment you don't even get to meet with someone and try out. Plus, I live in New York City, and it would be a pain to transport that stuff from my Brooklyn apartment to Manhattan. Plus, it doesn't have a warranty.”
Local logistics
Trade my spins
Last year, Kimmelfeld piloted what would become Trade My Spin, a service that collected and sold used Peloton equipment. At its core, the business was a DIY logistics service that removed the friction from buying and selling used exercise equipment. It was a conversation with Joey Benjamini that transformed the one-man operation into a viable business.
Benjamini built a contract-based logistics network for Collectible Classics, his Pennsylvania-based vintage car dealership that relies on contract drivers to deliver vehicles sold primarily through used-car platform Bring a Trailer.
“Logistics is the most complex and most important part of this business, and it also has the biggest barrier to entry,” Benjamini told TechCrunch. “We have a database of 1099 contractors who make deliveries, and we're constantly growing our network of drivers who know us and our processes. Once our drivers are trained, we send them out to pick up the bikes. It's that simple.”
The new team began work on the Trade My Spin site prior to the funding. The page remains simple, even though the inventory has grown to include Peloton treadmills, rowing machines, and a variety of accessories. Clicking the Buy button takes you to a vibrant marketplace of services, while clicking the Sell button takes you to a form for the equipment you want to sell. With the site complete, the young company raised a small amount of pre-seed funding to scale its operations.
Talk to Peloton
The startup has also had multiple conversations with Peloton since it officially launched in March. A key goal of Trade My Spin's calls is to convince them that their relationship is symbiotic, not parasitic. At first glance, it's easy to see why Peloton is hostile toward the company.
Viewed as a zero-sum game, each used bike sold represents a potential loss in the sale of a new bike, and while keeping bikes in circulation is certainly a sustainability win, Peloton shareholders are no doubt keeping their eye on the bottom line in hopes of a turnaround.
But the calculus changes when you consider that Peloton's ultimate goal is to be a content company that sells hardware, not the other way around: Rather than simply viewing a bike sale as a missed sale on a new bike, Trade My Spin's pitch is that for every bike taken out of circulation, it represents one less subscription to a class on Peloton's content platform.
“The bikes we take back are from people who aren't using them,” Benjamini says. “If they're not using their bikes, they're not subscribing. Peloton is a subscription service. It's $44 a month. Every time we resell a bike, and we've resold thousands of bikes, they make $500 a year in profit.”
Things would no doubt have been different if Peloton had been more aggressive in selling its own used equipment, but ultimately, Trade My Spin stepped in and filled a gap in the market.
A new spin
Trade My Spin Founders (from left): Ari Kimmelfeld, Joey Benjamini
Trade My Spin has built a logistics network that allows it to offer same-day or next-day delivery in most major cities in the continental U.S. For more remote locations, it can take up to five days to complete, but that's still faster than the three to five days it takes Peloton to fulfill an order.
In the short term, Trade My Spin's expansion goal is to add fitness equipment to its buying and selling options. In the long term, the company hopes to leverage its growing network of contractors to handle the buying and selling of all kinds of tricky items. Trade My Spin will likely need to raise additional funding rounds to get there.
“We want to transform,” Benjamini said, “from where we are today to becoming a marketplace for large, bulky items with logistics. That's our plan, and no one else can do that. We have a barrier to entry in terms of getting drivers, and we have a moat around our business.”