Amazon offers US$500 ‘Prime Bike’, encroaching on Peloton’s niche

Amazon.com Inc launched a “Prime Bike” on Tuesday, a bid to compete with an array of at-home exercise bikes that have become popular in the pandemic, such as those offered by Peloton Interactive Inc.

The new EX-Prime Smart Connect Bike is available on the e-commerce giant’s website for US$500, a steep discount to Peloton machines that cost well over US$1,000. The Prime bike is only available to Amazon Prime subscribers and was developed through a partnership with Echelon Fitness. The machine comes with a free 30-day Echelon membership trial, which includes live exercise classes.

Shares of Peloton fell as much as 6.7 per cent on Tuesday, but recovered to be down about two per cent in afternoon New York trading.

A Peloton Interactive Inc store stands in Corte Madera, California, U.S., on Thursday, August 29, 2019. Founded in 2012, Peloton describes itself as the “largest interactive fitness platform in the world” with more than 1.4 million members, according to its filing. (Photo: Bloomberg)

Amazon often releases new hardware as a way to get its technology into consumers’ homes. The company sometimes uses a scatter-shot strategy, pushing out many different gadgets to see what works, including microwaves and clocks.

This is not the first time Echelon has entered into a partnership to distribute its bikes. It also had a deal with Walmart Inc. for a similar model at US$500. This is why KeyBanc Capital Markets analyst Edward Yruma isn’t too worried for Peloton.

“Other than a few cosmetic changes, the US$500 bike is almost identical to Echelon’s US$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,” Yruma wrote in a note to investors.

— Bloomberg