Peloton had one of the most turbulent half decades in tech. The home fitness firm experienced some of the industry’s highest highs and lowest lows in dizzying succession. It’s the story of a buzzy startup that garnered a cult-like following among influencers and fitness fanatics. A global pandemic shot the brand to unknown heights, before over-investment, recalls, mass layoffs and executive departures brought the brand crashing back down to earth.
As of mid-2024, Peloton is down but not out. The company avoided a major liquidity crunch with a massive debt refinance at the end of May. That marked the end of a month that also saw a 15% staff reduction and the exit of CEO Barry McCarthy a little over two years after he took over for founder John Foley.
Peloton’s high-profile roller-coaster ride has had wide-ranging knock-on effects. Excitement peaked at the height of the pandemic, but once the world began to reopen, sales cratered. Some who were hooked at the height of social distancing have remained loyal to the brand. Plenty of others, however, lost that connection. A degree of attrition is inevitable with any fitness offering, but those figures were unquestionably exacerbated by the reopening of gyms and other exercise alternatives.
The result is that a lot of unused pieces of pricey fitness equipment are occupying space in homes across America; they’re now “clothing racks,” as a colleague recently referred to her Peloton bike. A quick search on Facebook Marketplace reveals row after row of the stationary bike, routinely listed around $300 to $500 — a fraction of the cost of a new model (around $1,500). For many once enthusiastic owners, the hardware has become a nuisance.
But for a pair of East Coast entrepreneurs, it’s an opportunity.
The Trade My Spin origin story starts modestly, when now CEO Ari Kimmelfeld began looking for a good deal on a used Peloton bike. As good as the Facebook and Craigslist prices were, relative to buying new from the manufacturer, the experience had its own issues.
“There was a massive inconvenience, buying something that bulky,” Kimmelfeld, who was then working at Ernst & Young’s strategy consulting arm, EY-Parthenon, tells TechCrunch. “Five hundred dollars was a lot of money, and meeting up with a stranger and giving them money for a piece of equipment that you can’t really test out. Also, I live in New York City. Getting something like that from an apartment in Brooklyn to Manhattan is difficult. Also, there’s no warranty.”
Local logistics
Kimmelfeld began a pilot for what would become Trade My Spin last year, picking up and selling used Peloton equipment. At its heart, the offering was a DIY logistics play, removing the friction from buying and selling used exercise equipment. It was a conversation with Joey Benjamini that transitioned the one-man operation into a viable business.
Benjamini built contractor-based logistics network Collectible Classics. His Pennsylvania-based vintage car dealership relies on those contracted drivers to deliver vehicles primarily sold through used car platform, Bring a Trailer.
“Logistics are the most complicated and the most important part of this business — and the biggest barrier to entry,” Benjamini tells TechCrunch. “We have a database of 1099 contractors who do deliveries for us. We’re constantly growing that network of drivers who know our company and our process. Once a driver is trained, we dispatch them to pick up bikes. It’s very simple.”
The new team began work on the Trade My Spin site prior to seeking funding. The page remains simple, even as the inventory has grown to include Peloton’s treadmills, rower and a variety of accessories. A Buy button displays the service’s bustling marketplace, while Sell surfaces a form for the equipment you’re looking to unload. With the site in place, the young company raised a small pre-seed to scale operations.
Talking to Peloton
The startup has also had multiple conversations with Peloton since officially launching in March. Trade My Spin’s primary goal with the calls is convincing that theirs is a symbiotic — rather than parasitic — relationship. At first glance, it’s easy to understand why Peloton might be antagonistic toward the company.
Viewed as a zero-sum game, every used bike sold represents a potential lost sale on a new bike. While it’s true that keeping bikes in circulation is a net positive on the sustainability front, Peloton shareholders are no doubt looking at the sales bottom line in hopes of seeing a turnaround.
The math changes, however, when considering that Peloton’s ultimate goal is being a content company that sells hardware, rather than the other way around. Rather than simply every used bike sale being a missed sale on a new one, Trade My Spin’s pitch is that every bike removed from circulation is one fewer subscription to Peloton’s content platform of classes.
“Every bike we take is from someone who is not using that bike,” says Benjamini. “If someone’s not using the bike, they’re not using the subscription. Peloton is a subscription service. It’s $44 a month. Every time we flip a bike — and we’ve flipped thousands of bikes — they make $500 a year.”
The relationship would no doubt be different had Peloton been more proactive about moving its own used equipment. Ultimately, however, Trade My Spin stepped in to fill that underserved hole in the market.
A new spin
Trade My Spin has pieced together a logistics network capable of offering same or next-day delivery in most major cities in the continental U.S. More-remote locales can take up to five days to complete, which is still faster than the three to five days Peloton takes to process orders.
In the short term, expansion involves adding more fitness equipment to Trade My Spin’s buying and selling options. Longer term, the company is looking to leverage its growing network of contractors to include the buying and selling of all sorts of unwieldy objects. Trade My Spin will likely require an additional funding round to get there.
“We want to transition,” Benjamini says. “We take it from where we’re currently at, and we build it into a large-scale marketplace for bulky items with logistics. That’s the game plan, and no else is going to do that. There’s a barrier to entry and a moat around the business with regards to having the drivers.”
