Why Peloton sells on Amazon | Comment

Earlier this summer I bought a mattress online – in a boring, conventional store.

Let me explain why my personal transaction reveals the shrinking of a Silicon Valley dream.

One of the big ideas of the last decade in technology and shopping was that a lot more products would skip stores and sell their wares to us directly online instead.

The thinking of newcomers like sneaker company Allbirds, eyewear company Warby Parker, mattress seller Casper and cosmetics brand Glossier was that the old ways of making and selling products and finding customers needed to be imploded. . They wanted to be able to control their own destiny and not share their revenue with a retailer.

Companies in this category — the industry term is “direct-to-consumer” brands, but by that term — often made products in their own factories, used Facebook ads, or paid social media influencers to promote their products, interacted with their customers like they were friends, and sold us stuff from their own websites.

We wouldn’t have had a relationship with Cheerios (I think?), but people felt a connection with Dollar Shave Club or Fashion Nova, an online clothing company.

Tesla and indoor fitness company Peloton also fit that mold. Tesla makes cars in its own factories and attracts customers through Elon Musk’s tweets, and people buy Teslas directly from the company. No Big Jim car dealership needed. (More on Peloton in a minute.)

If all of this seems completely normal to you, it’s because this Big Idea has changed our habits.

It’s natural now, especially if you’re under 30, to see a swimsuit worn by a top athlete you follow on Instagram and decide to buy it without ever seeing that one-piece in a store or without knowing anything about the manufacturer. Phenomena like Instagram-famous cookware and the hit Chinese fashion app Shein are signs that the direct-to-consumer idea has worked.

But maybe only up to a point. Let me come back to this mattress.

I walked into the Raymour & Flanigan furniture store and was surprised that many of the mattresses in the showroom are from brands, like Casper and Purple, that started out as store-hopping.

I’ve told you before about the struggles of Casper and some other start-ups that took too much money from investors, didn’t always spend it wisely, and fell on hard times. It’s one of the reasons Casper is willing to sell its products in more places where people already shop.

But that’s not Casper’s only problem. The reality of the Big Idea is that it is HARD and expensive to make mattresses, shoes, jeans or glasses, and then persuade people to like them and buy them. And then buy them again.

It is becoming increasingly expensive to buy ads on once relatively affordable social media sites like Facebook. And speaking frankly: Do you really want to have costslanguages on your mattress brand? All the work of persuading customers to like a product and then finding the product and buying the product is exhausting.

Selling in store is a shortcut. You don’t have to persuade people to go to Walmart, Amazon, or a furniture store. They’re already there, and if not, it’s the retailer’s job to lure people inside.

Many start-ups that started with the store-hopping principle now sell, like Casper, in stores – both those they own and, more strikingly, those of conventional retailers. Allbirds shoes are now sold in Nordstrom department stores, and the company said earlier this month that the stores were its main source of growth in the United States.

Peloton said last month it would sell its indoor bikes and other fitness equipment on Amazon in the United States. On Amazon?!?

Peloton wouldn’t be selling on Amazon if the company hadn’t struggled to manage the pandemic-related surge in indoor bike purchases and then the inevitable drop in demand. (In August, Peloton reported a quarterly loss of $1.2 billion.) But the decision also shows that limiting your potential customer base to only those you can find directly presents challenges.

Allbirds only sells Allbirds shoes, but you can browse Nordstrom for a bunch of brands and also buy a handbag. Almost all brands, including Oreos and Clorox, now want to sell some of their products directly to shoppers. But come on. Do we want to go to 30 websites to buy everything we need? Isn’t it easier to go to Costco or scroll through the Amazon app?

These product sellers born in the last decade have changed shopping and our minds. Casper has established an identity from nowhere, to the point that it’s compelling enough to stand out in a sea of ​​mattresses in a furniture store. Peloton has created a name for itself that (perhaps) can shine through Amazon’s vast mall.

But there’s nothing particularly Big Idea about it. These companies have built a brand identity, as Nike and Toyota have. And now they’re doing a lot of what Nike and Toyota did by selling old-school stuff.

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