- Peloton drew backlash after introducing a $95 activation fee for used bikes.
- The company said the money ensures new members receive a "high-quality onboarding experience."
Peloton has sparked outrage from customers after announcing a new $95 activation fee for anyone in the US or Canada buying a secondhand bike.
The activation fee includes a $25 spare parts credit, a 50% off coupon for up to three pairs of Peloton cycling shoes and a Peloton Bike mat, and a virtual onboarding session.
But a stream of users across social media have criticized the move following the announcement on Thursday. One Reddit user, who said they had been with the company just about since their inception, called it "outrageous."
"The value of the bikes have already been trashed they have just made them even less valuable," the user wrote, adding that there used to be nothing like Peloton "but there are options now," seemingly referring to competitors in the market.
The company said in a letter to shareholders that it wants to "ensure these new Members receive the same high-quality onboarding experience Peloton is known for."
Peloton views "the secondary market as an important channel" and will continue to improve members' experience, it continued. Its secondary market drove 16% year-over-year growth in the company's paid subscriptions in the fourth quarter.
Now, the company can use those secondhand sales as a further source of revenue.
Some who oppose the new fee say it would decrease sales of used bikes and increase owners' costs.
"It'll get to the point where people selling their equipment will offer to cover the activation fee to incentivize potential buyers," A Reddit user posted. "So ultimately (eventually) the original owner will be the one eating the cost."
Others have called the move "greedy," according to an unofficial Peloton news forum on Facebook.
Longtime Peloton user Sarah Haeck told Business Insider that the bike helped her lose 100 pounds. She even traveled to New York from Washington to take her 1,000th ride in a live studio last December. She criticized the move to add the fee when customers already pay a subscription.
"It makes me sad to see it become more of a money grab for those trying to improve their health," Haeck said.
A standard Peloton bike costs $1,445, and an upgraded model costs $2,495. The company sells used Pelotons for $1,145 for a standard model or $1,995 for the Bike+. Meanwhile, secondhand sales start at around half of that, but they still require a subscription, which costs $12.99 or $24 a month.
The decision comes amid Peloton's ongoing effort to reverse a major share decline following success during the pandemic. In the last couple of years, the company has gone through multiple rounds of job cuts, a massive recall, and two CEOs.
For the first time in years, though, Peloton has shown signs of improvement. Its fourth-quarter revenue hit $644 million, it said on Thursday, an increase of 0.2%. That marks revenue growth for the first time since 2022. The company also narrowed its net loss.
In its shareholder letter, it said its progress reflects its "continued focus on aligning our costs with the size of our business." Peloton announced a restructuring plan in May to cut costs.
Peloton did not respond to a request for comment.