At the start of 2020 Echelon Fitness was projected to do three times its business in 2019. Then the coronavirus struck.
Overnight sales jumped tenfold. “Every day was like Black Friday,” CEO Lou Lentine tells Welltodo. But while the sales rolled in and the world embraced connected fitness, the Tennessee-based company was forced to scale at breakneck speed.
Founded in late 2017, Echelon Fitness launched its first smart bike, the Connect ECH-01, in June 2018, gaining 50,000 members in the first 90 days. A year later, private equity firm North Castle Partners – which formerly owned a controlling interest in Equinox and currently has stakes in fitness brands Barry’s, SLT, Brooklyn Boulders and a leading franchisee of Crunch Fitness – invested an undisclosed amount to boost the company’s valuation over $100m.
While the company may be playing catch up to sector leaders Peloton – which earned a reported valuation of $8 billion when it went public in 2019 and now has a valuation well in excess of $20 billion – Echelon can boast a range of smart bikes, reflect mirrors, treadmills and rowing machines that set it apart from the competition.
Here CEO Lou Lentine reveals how Echelon Fitness rose to the immense challenges faced over the past six months and why he believes anyone entering the sector will struggle to keep up with the brand now.
On the impact of COVID-19……
Our sales increased tenfold overnight.
We were fortunate that we planned to have a strong fourth quarter and had just acquired a larger manufacturing facility. But-fourth quarter came in first-quarter this year.
The pandemic closed down China for a month and a half and we had $14 million in back orders within 30 days of the pandemic. We had to grow up very fast and prepare for the future. We had new accounting, streaming and back-end systems all in place but they had to evolve much faster than we planned.
Everything’s done by Zoom now so we’re experts in that. Being a global company we were very familiar with WeChat, Whatsapp, Skype. We were used to doing things that way so we jumped right in. We adapted well.
On scaling the business to handle increased demand……
Our sales have been phenomenal. In the US, Walmart is selling out of our products within days. We’re in all 800 Dicks Sporting Goods stores. Every day is like Black Friday. In the last week alone the company has had in excess of $50 million in orders placed by retailers.
The demand is something like you wouldn’t imagine. Our call volume went up 20 times. It meant we expanded our customer service team from a dozen people to a hundred, manning the phones from eight hours a day to 24 hours a day. We went from filming 600 to 1,500 classes a month. We had 70 employees last year, now we have almost 200. We’re hiring three to five people every week.
It’s been a lot of growth in the last 12 months. Our business was projected to do three times what it did in 2019. Now it’s projected to do eight times what it did last year, while our membership base has grown five times since the end of 2019. By the end of 2020 we expect it to double.
We’re not the largest company but we’re doing everything we can to meet the demand. It’s an exciting time.
On the changing face of fitness……
I think fitness has changed forever for everyone. connected fitness was already growing and trending with the younger connected generations, the pandemic had sped this transition up by multiples. Going to the gym will still be a part of peoples’ lives but they’re not as convenient any more. The demand is still there but there’s not going to be the supply because of the space they need. A lot of gyms are closing down globally because you can do this at home.
It’s changed the face of retail for sure, for many years to come. The younger generation was more open with online ordering but the past six months has widened those demographics. It’s made a big change and it’s an exciting time for us.
The pandemic has been challenging for a lot of people around the world, it’s caused a lot of hardship but we’re blessed that we’re in an industry that is actually prospering from it.
On addressing diversity and inclusion……
When the Black Lives Matter movement happened we looked internally within ourselves and within the company at what we could do better. We brought in a head of diversity to help us adapt everything from our advertising to our instructors to members of our internal team. We try to be diverse on all levels, on gender, race, age.
Our members called us out a little bit and we listened. I actually got on the phone with five of our members to hear what they had to say and from that we made changes. We got together as a group and asked, what can we do better? How can we represent today’s culture better within our company?
Last fall we realised we needed to be more diverse in our company and that led to us opening our Miami studio. Over the past six months our company has adapted and made some changes to our culture that is going to change things forever.
On differentiating in a crowded market……
Firstly, we have several modalities under one platform: cycling, rowing, our Reflect mirror. Secondly, our trainers are more like your friend, they’re very approachable. They go on social media to congratulate you on your 500th ride or wish you happy birthday. I think that makes a big difference. People like it. It’s a positive place for people to train and have fun.
If you compare us with Peloton, Peloton has great instructors but we appeal to a much broader audience. We have younger instructors, older instructors, quirky instructors, hip-hop instructors. We have such a variety in our 30 instructors and it makes a big difference because you’re going to connect with our instructors much more than our competitors.
The competition has also been very exclusive, while we’ve been very inclusive. They’ve gone after the 1%, we’re going after the 99%. We have a very broad customer base because of our price points. We have a product that’s at a similar price point to the high-end competition. But we also have an entry-level product.
The five bikes in our line can go from $500 to $2,000. All of them ride on the same platform. It doesn’t matter which one you can afford, you’re all riding on the same road and being entertained by the same instructors.
On the globalisation of the connected fitness revolution……
Internationally the past six months have put the adoption of connected fitness into hyper warp acceleration. It’s brought us forward by at least a couple of years.
Connected fitness has been very popular in the States for a few years now but things weren’t moving as fast in places like Australia. It was because they didn’t quite get it. They had never seen it before. Now everybody gets it.
Our UK community has become really good friends with people all over the US that they only know from our Facebook and rides together. Now we have Australia and Germany and France and all these other countries coming online too in the next six months. They all understand why you need connected fitness.
On opportunities within corporate wellness……
In Japan six months ago, nobody in a corporate environment would even think about having an employee work from home. Now you have employees in Japan that are working from home and that’s going to be the new norm. You’re seeing corporate headquarters of huge businesses shut down because they don’t have that need anymore. Worldwide the culture has changed.
Globally we’re now working with some of the largest healthcare companies so employees can track their workouts and get points for exercising. We have four on board right now and are working with Gympass so people can participate in our classes at home. That wouldn’t have happened before COVID.
On Echelon’s next steps……
Over the next 12 months I think we’re going to see more competitors coming into the marketplace and we welcome that. We think we have something special here.
We’re really focused on using technology and AI to better understand our members and create rides that they love. In the US and soon after in Europe we’re launching two treadmills. We’re also launching a new bike at the end of the year designed by Eric Villency, who designed the SoulCycle and Peloton bikes.
For our rower, we hired two of the best rowing instructors that we could find. Our head of content has a background in MTV, Peloton and Flywheel, so he’s got some great understanding of creating amazing content for workouts on and off the rower. You’re getting a full-body workout. It really will kick your butt.
We’re building a new studio in Europe that will open by the end of the year and in the US we’re building a mega studio with almost a dozen different studios under one roof that will open in 2021.
For anyone coming into the marketplace, it’s going to be a challenge to catch us. We have a great platform, great instructors, four different studios where we’re filming classes, multiple modalities and our team is some of the best in the industry.