Trade My Spin is building a business around used Peloton gear

Peloton has had one of the tumultuous half-decades in tech. The home fitness company has experienced a few of the industry’s biggest ups and downs in a dizzying sequence. This is the story of a high-profile startup that became the main focus of a cult following amongst influencers and fitness fanatics. A worldwide pandemic catapulted the brand to unprecedented heights before overinvestment, product recalls, mass layoffs, and executive departures brought it back all the way down to earth.

Peloton is within the red in mid-2024, but not out of the business. The company avoided a major liquidity crisis with a massive debt refinancing in late May. That marked the top of a month that also saw a 15% staff cut and the departure of CEO Barry McCarthy a little over two years after he took over from founder John Foley.

Peloton’s unique rollercoaster ride has had a wide selection of negative effects. Excitement peaked at the peak of the pandemic, but because the world began to reopen, sales fell. Some who got hooked at the peak of social distancing have remained loyal to the brand. But many others have lost that bond. Some churn is inevitable with any fitness offering, but those numbers have undoubtedly been exacerbated by the reopening of gyms and other alternative exercise options.

As a result, a lot of unused, expensive fitness equipment is taking over space in homes across America; they’re now “coat racks,” as a coworker recently dubbed her Peloton bike. A fast search of Facebook Marketplace reveals row after row of exercise bikes routinely priced around $300 to $500—a fraction of the worth of a latest model (around $1,500). For many once-enthusiastic owners, the equipment has turn into a pain. But for a pair of East Coast entrepreneurs, it’s a chance.

This Change my spin The origin story begins humbly, when current CEO Ari Kimmelfeld began on the lookout for a good deal on a used Peloton bike. As good as the costs were on Facebook and Craigslist, in comparison with buying latest from the manufacturer, the experience had its own problems.

“Buying something that big was a huge inconvenience,” 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 him money for a piece of equipment that you can’t really test. And I live in New York. Moving something like that from a Brooklyn apartment to Manhattan is tough. And there are no guarantees.”

Local logistics

Kimmelfeld began piloting what would turn into Trade My Spin last yr by collecting and selling used Peloton gear. The offering was essentially DIY logistics, removing the friction of shopping for and selling used exercise equipment. It was a conversation with Joey Benjamini that transformed the one-man operation into a profitable business.

Benjamini has built a logistics network based on cooperation with contractors Collectible classicsHis Pennsylvania-based classic automotive dealership relies on drivers to deliver vehicles sold primarily through the used-car marketplace Bring a Trailer.

“Logistics is the most complicated and important part of this business—and the biggest barrier to entry,” Benjamini tells TechCrunch. “We have a database of 1099 vendors who deliver for us. We’re constantly growing a network of drivers who know our company and our processes. Once a driver is trained, we send them out to pick up the bikes. It’s very simple.”

The latest team began working on the Trade My Spin website before looking for funding. The site stays easy, whilst the inventory has expanded to incorporate Peloton treadmills, rowers and a number of accessories. The Buy button displays a bustling marketplace for the service, while Sell displays a form for the equipment you would like to sell. With the positioning up and running, the young company raised a small amount of seed money to scale operations.

Interview with Peloton

The startup has also had multiple conversations with Peloton since its official launch in March. Trade My Spin’s primary focus within the conversations is that its relationship is symbiotic, not parasitic. At first glance, it’s easy to see why Peloton is likely to be hostile toward the corporate.

Seen as a zero-sum game, every used bike sold represents a potential lack of a latest bike sale. While it’s true that keeping bikes in circulation is a net positive on the sustainability front, Peloton shareholders are undoubtedly trying to the sales figure for change.

The math changes, nonetheless, while you consider that Peloton’s ultimate goal is to be a content company that sells equipment, not the opposite way around. Rather than simply selling used bikes as a missed sale on a latest one, Trade My Spin claims that each bike taken out of circulation is one less subscription to Peloton’s class content platform.

“Every bike we take is from someone who isn’t using it,” Benjamini says. “If someone isn’t 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 little doubt have been different had Peloton been more proactive about moving its own used gear. Ultimately, Trade My Spin stepped in to fill this underserved gap out there.

New turn

Trade My Spin has built a logistics network that permits for same-day or next-day delivery in most major cities within the continental U.S. More distant locations can take as much as five days to satisfy an order, which is still faster than the three to 5 days it takes Peloton to process an order.

In the short term, expansion includes adding more fitness equipment to Trade My Spin’s buying and selling options. In the long term, the corporate desires to leverage its growing network of contractors to incorporate buying and selling all forms of bulky items. Trade My Spin will likely need an extra round of funding to attain this.

“We want to transform,” Benjamini says. “We’re going from where we are now and building a large-scale market for large items with logistics. That’s the game plan, and no one else is going to do it. There’s a barrier to entry and a moat around the business when it comes to drivers.”