article丨Pole Business, author丨Cindy, editor丨Yang Ming
Internet fitness may really not be a good business.
Recently, many foreign media reported that the American interactive fitness platform Peloton, a star company known as "Netflix in the fitness world" and " Dell in the fitness world", is considering selling, and Amazon and Nike are evaluating their relationship. The company's bid. In addition, although Apple , Microsoft , Google , Meta and other companies have the ability to buy Peloton, there are not many interested buyers.
In the early days of the COVID-19 outbreak, Peloton became the darling of investors. However, due to product problems and slowdown in performance growth, Peloton's stock has continued to plummet in the past few months, and its market value has shrunk from nearly $50 billion to less than $10 billion. Such a bad trend caused the market to lose confidence in the sustainability of Peloton's business model, and began to pressure Peloton, asking the board of directors to fire the CEO and consider selling the company.
Peloton stock price trend
Peloton is in deep trouble, and being involved in rumors of "selling out" is obviously not good news for domestic entrepreneurs - in the past few years, the online fitness trend has spawned numerous domestic fitness apps, and many people hope to copy Peloton's successful model. The business scope is also becoming more and more similar, including membership, hardware, sportswear, etc.
However, so far, no one has reached the heights of Peloton, and has not successfully entered the capital market. Even Keep, which has raised 8 rounds of financing in seven years, has been rumored to be listed for IPO many times, but it still has not been successful due to commercialization. Problems such as difficulty in making profits have not favored the capital market.
Therefore, when Peloton is about to "sell out", the question arises: Is there still hope for the future of for Keepers? Even more, is the Internet fitness field really a good business?
01, Peloton’s myth collapse
In an open letter to the Peloton board of directors, Jason Aintabi, chief investment officer of Blackwells Capital LLC, which holds less than 5% of Peloton’s shares, was unceremonious:
“Peloton’s situation today is worse than before the (new crown epidemic), fixed costs High, excess inventory, lackluster strategy, languid employees, dissatisfied shareholders, and worse performance than all companies in the Nasdaq 100 Index "
Peloton did indeed perform quite poorly in all aspects: First quarter operating results of fiscal 2022. It closed at US$805 million, lower than market expectations, growing only 6% year-on-year, and profit growth reached a bottleneck. At the same time, the net loss was as high as US$376 million, compared with a net profit of US$69.3 million in the same period last year. On top of that, its number of active users was lower than expected. Looking at the stock price of
, as of February 8, Beijing time, its stock price was less than US$30 and its market value was less than US$10 billion. Compared with the peak of US$160.72 per share at the end of 2020 and a market value of approximately US$50 billion, it has plummeted by more than 80%. On January 24, Peloton was officially kicked out of the Nasdaq 100 Index.
Peloton’s troubles don’t stop there. A confidential Peloton report shows that because many products have long been backlogged at ports and warehouses, it will discontinue production of its flagship product, the treadmill "Tread", for six weeks, and will not produce more expensive treadmills in fiscal 2022 (as of the first half of 2022). "Tread+".
To save itself, Peloton has hired McKinsey to help cut costs. A leaked audio said Peloton executives had discussed cutting 41% of their workforce. In addition, in terms of retail stores, 15 of the 123 retail stores will be closed.
The superposition of multiple factors is just a symptom of Peloton's steady decline. The deeper reason is that Peloton's business model and home furnishing track have always been considered unsustainable by the capital market.
In 2012, Peloton started with spinning bicycles. In September 2019, Peloton was officially listed on Nasdaq with an issue price of US$29. It is regarded by the industry as "the first smart fitness stock to be listed."
From the perspective of business model, Peloton is “content + smart hardware”. In terms of hardware, it mainly designs, manufactures and sells bicycles and treadmills, with prices ranging from US$1,495 to US$4,000. Peloton has sold more than 400,000 bikes since it began selling bikes in 2014. Hardware sales have become Peloton's most important way to make money.In terms of
content, Peloton has developed an APP and launched a fitness course subscription service to users. Members cost US$39 per month and can be used with a bicycle or treadmill.
In addition to the closed-loop effect of the hardware + software combination, Peloton is well versed in traffic marketing, and through marketing, it turns the home into the best place for fitness. In addition, the Peloton interactive fitness mode stimulates users' desire to socialize. These combinations of
have subverted the traditional home fitness product concept and business model. It has strong user stickiness and has become the target of imitation by many domestic peers. Many people even believe that Peloton has found the intersection between hardware, software and services, and is the new Apple in the Internet industry.
Despite this, Peloton has not been favored by the capital market and investors for a long time. Until March 2020, the outbreak of the new crown epidemic in the United States forced the closure of gyms, restaurants, movie theaters and other places where people gathered. Its stock price began to skyrocket from the lowest point of US$17.7 per share to the highest point of US$171.09 per share. Nearly 10 times.
Just when Peloton seemed to be about to explode the Internet fitness market, in March 2021, an accident pushed Peloton to the forefront - Tread+ caused the death of a child due to the excessive height of the running platform and the large gap between the running belt and the ground. . Subsequently, the U.S. Consumer Product Safety Commission (CPSC) stated in a statement that the treadmill posed a risk of serious abrasions, fractures, and death to children, and that child consumers should stop using the product immediately.
The financial report shows that Peloton has been losing money for a long time.
Peloton is at a loss for emergencies. Two months later, Peloton announced the recall of 12.5 treadmills around the world. However, Peloton has begun to fall from the "altar" and its stock price has begun to fall off a cliff.
At the same time, as the epidemic becomes normalized in the United States and people return to offline gyms, demand for Peloton continues to be weak. Peloton has since lowered the price of its spin bikes from $1,745 to $1,495, but it has had little effect.
As of 2021, Peloton has only about 2 million paid members. In comparison, streaming media giant Netflix has more than 200 million subscribers across the entire network, a full 100 times difference. Therefore, even if the repurchase rate of Peloton users is as high as 96%, without sufficient user support, Peloton will always be difficult to achieve good profitability.
It can be seen that Even though Peloton’s hardware, content, and services are very good, and the United States is also the most developed country in the sports and fitness industry in the world, when the dividends of the epidemic disappear, user growth slows down, and hardware equipment sales decline. The predicament cannot be changed. , the collapse of Peloton’s myth is inevitable. Where do
02 and Keep hope to be?
"Many people have concluded from the Peloton model that the market space for home fitness scenarios is large enough, but they ignore the essential difference between fitness users and fitness consumption users. The number of consumers who are willing to pay for fitness is always only a small proportion." Many observers It is believed that even if is not acquired by a large company, it will be difficult for Peloton to create new brilliance after returning to its original starting point.
This means that for many Chinese Peloton players, they need to rethink the future direction.
Many people believe that the domestic fitness industry is a huge gold mine full of potential. Data shows that from 2016 to 2021, the size of my country's fitness equipment market has generally been growing year by year. According to the China Business Industry Research Institute’s forecast, my country’s fitness equipment market will reach 51.85 billion yuan in 2021.
Therefore, in the past few years, stimulated by Peloton, more than 300 fitness apps have been born in China, from a large number of vertical entrepreneurs such as Keep, Gudong, RELX Circle, to Xiaomi , Huawei , etc. Big factories are beginning to plan their layout.
From the perspective of industry status, Keep can be regarded as a unicorn in the domestic track - within three months after its launch in 2015, Keep received millions of traffic. In 2018 and 2019, the number of Keep users was "100 million" Complete user growth.
However, although ’s rapidly growing Keep has advantages such as community atmosphere and online time, it is still just a “tool” without a clear profit model. In October 2019, Keep laid off a large number of employees, and many business lines such as overseas, outdoor, AI, and running were disbanded.Other fitness apps that are not as good as Keep, many of them went out of business quickly due to homogeneous content and low user retention.
After the outbreak of the new crown epidemic, the stay-at-home economy is booming, and Keep and others are "resurrected". According to the "2020 China Home Fitness Short Report", within one month from January 25, 2020, the daily downloads of Keep, Daily Yoga, and Mint Health Apps have all achieved substantial growth, with Keep having the highest growth rate of 478% .
In June 2020, Keep announced that it had achieved overall profitability. However, as the epidemic stabilizes and normalizes, it is difficult to achieve rapid growth. For Keep, which has received 8 rounds of financing with a total amount of US$600 million, it has become a top priority to enter the capital market as soon as possible and provide investors with returns.
Starting in 2020, the market has repeatedly reported that Keep is sprinting for an IPO. In March last year, there was news that Keep would apply to be listed in the United States as soon as the second quarter; in July, it was suddenly reported that Keep had canceled its listing plan; by the end of 2021, it was reported that Keep was considering Hong Kong as its IPO location.
As of now, there is no latest listing news for Keep, and it is likely that it has been stranded indefinitely. However, almost all opinions confirm that Keep urgently needs to go public to satisfy its thirst for funds and commercial expansion.
From the perspective of business model, although Keep has repeatedly hoped to make profits through membership and value-added services, according to the data released by Keep in the NDR roadshow, Keep’s revenue sources are from three major categories: advertising and others, membership and paid content, and fitness products. ——In 2020, Keep’s total revenue was 1.1 billion yuan, of which fitness product revenue exceeded 600 million yuan, membership and paid content revenue exceeded 300 million yuan, and advertising revenue exceeded 100 million yuan. Overall, Keep’s current performance on its three main profit channels is mediocre.
In fact, although Keep is based on traffic and gradually launches corresponding hardware products, it has the same business path and business strategy as Peloton, but the current conversion rate of hardware products is too low. Since 2017, Keep has successively launched smart hardware products such as treadmills, spinning bikes, yoga mats, smart bracelets and other fitness equipment and related products. Judging from major e-commerce platforms, Keep has both yoga mats worth tens of yuan and The spinning bike C1 Pro, which sells for 4,999 yuan, currently has only about 500 reviews on JD.com , and has not formed an effective conversion with Keep’s hundreds of millions of user traffic.
Compared with Peloton, the user retention rate of Keep and is too low. 's "2019-2020 China Gym Market Development White Paper" shows that during the epidemic prevention and control period, Keep's MAU increased by 20% year-on-year, but by the second half of 2020, Keep's monthly active numbers fell back to the same period in 2019. Data analyzed by Analysys in June 2021 also shows that Keep’s 30-day user retention rate is only 20.85, which is far lower than the median of 34.56% for sports and health apps.
Keep offline stores
In addition, according to the Keep roadshow PPT, Keep’s cumulative users are as high as 300 million, but its monthly active users are only 31 million, with 2.5 million monthly subscribers and a member penetration rate of 8.2%. Compared with Peloton, which had 36.5% of paid users when it landed on Nasdaq, has a very low proportion of paid Keep members.
This is related to Keep’s business model of free first and paid later, and also related to the main user groups. Peloton’s target user group is the middle class, while Keep’s main user group is young people aged 16-25. Both the consumption level and the cultivation of consumption stickiness are often not as good as the middle class.
Like Peloton, Keep’s reputation has been declining due to its reputation. Judging from feedback from major social platforms, product quality and content are not good, automatic deductions, false shipments, after-sales services, etc. often occur. "Keep seven days of free membership experience" means that the automatic renewal service is turned on, and after 7 days, After the period, automatic renewal was turned on, and the fee was deducted as soon as the 7-day free trial was launched..." "I spent money on annual memberships, but I didn't feel the actual use..." From these user opinions, we can see why Keep has accumulated users As high as 300 million, the number of member users is less than 3 million - the big reason for is that in addition to the constant "persuasion" of users, it is also possible that the proportion of early adopters is too large.
At the same time, more free users of Keep are being diverted.Vertical apps focusing on daily yoga such as Leke , FIT, Super Orangutan , Yuepaquan, Gudong, etc. have all taken away the paying users of Keep to varying degrees, and the offline stores of Leke and Super Orangutan. The quantity is still far ahead of Keepland offline stores, which spend a lot of manpower and material resources. The layout of Xiaomi, Huawei, etc. in smart products, their quality control supply capabilities and channel capabilities are difficult for Keep to possess.
In order to realize business, Keep has also entered various circles, such as the snack circle, and launched categories including protein bars , wafers, chicken, beef, whole wheat bread , konjac powder and so on. However, this is a more mature market than fitness equipment, and each category faces competition from a large number of leading brands. Whether it is brand power or product power, Keep does not have any advantage, so it has not made any waves so far.
Keep It may be a helpless move to not do your job properly. From the perspective of the overall environment, China’s fitness consumption habits are far from being formed. According to the "2019 Global Sports and Fitness Economic Report", China's fitness population penetration rate in 2018 was only 0.8%, that is, among 100 people, only 0.8 people may have fitness consumption habits, and the penetration rate in first- and second-tier cities such as Beijing and Shanghai is only Reaching about 5% to 6%. The American sports industry is already one of the top ten economic pillar industries in the United States, and its annual sports industry added value accounts for 3% of GDP.
Therefore, when the leaders of Internet fitness in China and the United States are in various crises and dilemmas, is the seemingly huge Internet fitness market just like a mirror in the mirror? If you want to really dig into it, what kind of problem-solving ideas can you give?
Keepers need to make a decision as soon as possible.
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