Amazon Tells Echelon Fitness To Stop Linking Its Connected Bike To Prime
Echelon Fitness is finding itself in hot water with Amazon over Echelon’s new “EX-Prime Smart Connected Bike,” which it claims was developed “in collaboration with Amazon.” The bike lists for $500, well below roughly $2,000 that Peloton’s popular connected bikes cost.
The only problem? “This bike is not an Amazon product or related to Amazon Prime,” an Amazon spokeswoman wrote in a statement to Bloomberg. “Echelon does not have a formal partnership with Amazon. We are working with Echelon to clarify this in its communications, stop the sale of the product and change the product branding.”
Echelon had released no comment on the matter at last check, although Bloomberg said the bike was no longer listed for sale on the Amazon Web site. And as of Wednesday (Sept. 23), the company’s original press release announcing the bike was no longer available online, according to Bloomberg.
But the announcement of an alleged Amazon-affiliated bike had a notable effect on the market anyway, as Peloton stock fell as much as 6.7 percent early Tuesday on concern that the firm would face Amazon as a direct competitor. The stock has since recovered, but the “news” clearly spooked Peloton investors.
“Other than a few cosmetic changes, the $500 bike is almost identical to Echelon’s $500 bike at Walmart.com, which has been available at Walmart.com since March and hasn’t had any noticeable impact to Peloton’s growth,” KeyBanc Capital Markets analyst Edward Yruma wrote in a note to investors, as per Bloomberg.
The concerns are perhaps explained by the incredible run of investment interest the connected-equipment space has generated in the past half-year as gyms shut down and many consumers turned their homes into personal havens of physical fitness.
The boom can be clearly seen among well-known names in the connected-fitness game like Peloton that have seen booming times in 2020 — soaring revenues and profits and (as the Echelon bike demonstrates) wide imitation. When Peloton released earnings recently, the connected-fitness firm sprinted past analyst expectations for both its latest quarter and full fiscal year.
Almost all of Peloton’s KPIs saw triple-digit increases as its connected-fitness subscription base topped 1 million, with a churn rate below 1 percent. Subscription revenue to the company’s app and at-home workout programs grew 99 percent year over year to $121.2 million in Peloton’s fiscal Q4.
And perhaps more impressive than merely drawing users in, the app is also showing lots of successful engagement. The average Peloton owner logged 24.7 monthly workouts vs. 12 in the same period last year. Subscription-based members worked out 76.8 million times in Q4, up from 17.8 million in the same 2019 period.
“Digital fitness is a highly competitive category, with higher churn and lower barriers to entry than our connected-fitness subscription and model,” CEO John Foley said on the company’s earnings call. “While we believe we have the best digital-fitness experience with the broadest and deepest assortment of high-quality programming. We continue to focus on digital as an acquisition channel and added value for our connected-fitness subscriptions, and we’re excited to say that digital is emerging as our fastest growing lead generation channel.”
But Peloton’s belief in its superiority aside, the segment is an ever more competitive space, with multiple players offering different variations on what Pelton does.
For instance, rival connected-fitness firm Tonal sells a roughly $3,000 wall-mounted system that simulates weights and uses artificial intelligence to guide users through training regimens. The company recently raised $120 million in a second round of venture-capital funding.
“This new capital will allow us to accelerate our marketing initiatives while scaling our supply chain so that we can change even more people’s lives through the power of strength training,” Tonal CEO Aly Orady wrote in a blog post. “We’ll also be rolling out innovative new software features and a wider breadth of workout categories that we are excited to share more on in the coming months.”
Such investor interest in the sector comes as working out in person at the gym has seen consumer enthusiasm plummet to all-time lows due to COVID-19. Gold’s Gym, 24-Hour Fitness, New York Sports Club’s parent and other chains have filed for Chapter 11 due to the pandemic.
Consumers seem mostly uninterested in rushing back to brick-and-mortar gyms, which has made the virtual fitness space all the more appealing — including to Big Tech players. For instance, Apple last week announced the launch of Apple Fitness+ to offer access to streaming studio workouts.
“We know Fitness+ will take working out with Apple Watch to the next level with unparalleled engagement, convenience, and inspiration,” the company said.
And while Amazon isn’t joining the race to dominate connected fitness with Echelon as a partner, we’re not sure we’d count the eCommerce giant out altogether. A less-expensive version of Peloton might not be Amazon’s chosen path into the market, but might the company someday soon choose a real offering all its own? That seems plausible.