Peloton's Predicament: WhatToDo When Demand Outstrips Supply

ByJon Picoult,Forbes Contributor (January 25, 2021)

Many Peloton customers are exhausted - not by their workouts on the company's exercise bikes, but by the seemingly endless wait for the fitness equipment they've purchased.

Peloton's pricey bikes and treadmills have been in high demand since the pandemic closed down gyms and fitness centers, leaving consumers to look for home-based exercise alternatives.

With Covid-19 lockdowns substantially increasing demand for its products, Peloton has struggled to keep up with orders.

According to The New York Times, Peloton customers are being given delivery timeframes up to ten weeks out from their purchase dates. And, as delivery day approaches (or even arrives), some customers get messages from Peloton indicating that their equipment won't arrive when promised.

Peloton's predicament might seem a lot more appealing than the converse problem - having a lot of product supply but no customer demand. In truth, however, an inability to reliably deliver on customer orders creates serious reputational risk for a business. It's a risk with which Peloton has become all too familiar, as customers take to social media to express their dissatisfaction and, in some cases, even cancel their orders and defect to competitors.

(Source: https://www.forbes.com/sites/jonpicoult/2021/01/25/pelotons-predicament--what-to-do-when-demand-outstrips-supply/?sh=5402746662d1)

The article states that there is an increased demand for exercise bikes because of Covid-19. Identify what nonprice determinant of demand this is and explain the effect this has on the demand curve for bikes, and on their market price and quantity. (3marks)