Amazon in San Francisco: Unions shut down delivery centers
Positive interactions with customers helped keep morale high despite the various media and business pitfalls. Peloton warehouse workers could smell the writing on the wall. The company froze hiring in November and considered laying off 41% of its sales and marketing staff in January. Demand had fallen well below the early levels of the pandemic and the stock price was falling. But field operations specialists still felt busy in the small but mighty St. Louis warehouse, Carroll said. “Pretty consistently, we were one of the highest-rated warehouses in the business,” he said.
So when Peloton laid off 2,800 people a few weeks ago, it wasn’t totally unexpected. But it hurt. The shakeup affected everyone from recruiters to marketers to former CEO John Foley himself. The company laid off everyone in the St. Louis and Seattle warehouses and significantly downsized the Denver warehouse. Peloton declined to break down the demographics of the 2,800 people laid off, but told Protocol that 20% were corporate employees. The peloton’s instructors – who rose to influencer status at the start of the pandemic – were unaffected.
Protocol spoke to a handful of laid-off employees who were part of Peloton’s delivery and manufacturing operations. The general consensus mirrored some of the gratitude reflected in the ex-Pelotoners’ LinkedIn posts. The company offered decent compensation and benefits, as well as mentorship opportunities. They are frustrated that poor business decisions put them in this situation (a sentiment reflected in recent Glassdoor posts). But above all, they are sad to lose a solid concert.
A day in a Peloton warehouse
The Saint-Louis warehouse was welded. Demand skyrocketed at the start of the pandemic, when everyone wanted Peloton gear. Peloton needed more bikes, treadmills and workers, stat. He bought exercise equipment maker Precor and even planned to build his first US factory in Ohio. He had to hire to keep up.
“There were all kinds of people,” Carroll said of the roughly 34 St. Louis workers. People trying to pay for their education, people who have been affected by the early layoffs due to COVID. Many came to Peloton after being referred by friends who already worked there, creating a workplace with personal connections. In St. Louis and other warehouses, many came from companies like Target or Amazon. “It was a network of people who were separated by a degree or two because they already knew someone who worked there,” Carroll said.
A standard day in a Peloton warehouse involved morning meetings on warehouse reviews, checking stock, and going out for deliveries. The Peloton delivery process required some showmanship. A van with a prominent Peloton logo pulled up in the driveway, in full view of jealous neighbors. It always arrived within the delivery time of two or four hours and always with notice. Masked workers dressed in Peloton gear jumped in, quickly asking if they should wear disposable boot covers over their shoes before entering the house. After bringing the equipment, the worker explained how to use it, ideally “with some charisma,” Carroll said.
The workers felt the lure of Peloton; they believed in the product. Former Denver field specialist Skylar Stetler lost his job coaching gymnastics in April 2020. He started at Peloton in November of that year, and it looked promising. “[Peloton] came as “the sky’s the limit,” Stetler said. “There are going to be new roles that are going to open up. Imagine it, it will happen. They settle in with visions of grandeur.
Wages were high compared to standard warehouse work. The average base salary for a Peloton Field Specialist is $22/hour, according to Glassdoor. The starting salary for hourly workers based in North America and Europe is $19/hour, according to Peloton. Licensed pelotoners told Protocol COVID protocols were strict and benefits were standard with 80 hours of PTO per year. Prior to the layoffs, Stetler was targeting mentorship for a supply chain analytics role.
But in the months leading up to the layoffs, their prospects looked shaky. Stetler noticed a lack of urgency to fill positions when people left. The company could not offer temporary workers full-time positions. Carroll felt that with each passing day his bosses had less information. Morale plummeted.
“Things weren’t really going together, and so you felt a bit lost,” Stetler said.
“An Amicable Breakup”
When former St. Louis field specialist Daniel Murphy received the dismissal call, his first thought was “an empty hole in my wallet.” Murphy was about to hand over his credit card to get his car fixed.
The St. Louis workers took a day to decompress, meeting that evening for a drink. But the next day, it was time for the hubbub. Carroll said he applied for 22 different jobs that morning. Some people had just had their first child or got engaged or, in Carroll’s case, bought a house.
There were mixed feelings. “A lot of people might compare it to some kind of amicable breakup. Things hadn’t been going so well for a while,” Carroll said. Warehouse workers had grown accustomed to fair pay and benefits If they wanted to do similar work elsewhere, they would probably be paid less.
Some employees thought back to XPO Logistics workers who were recruited during busy seasons. Prior to the mass layoff, around 60% of deliveries were made by Peloton workers. Peloton’s chief financial officer, Jill Woodworth, said on the company’s earnings call that it would drop to 40%, with the majority of deliveries handled by third parties.
Some workers feared that XPO workers would replace them. A handful of warehouse workers in St. Louis talked about unionizing in response to this fear of outsourcing, but nothing came of those conversations. In an email to staff this month, Foley noted that the company had “scaled up” partnerships with third-party logistics teams to meet demand. Now, Peloton is significantly reducing “our owned and operated warehousing and delivery footprint.”
Peloton warehouse employees are focused on customer satisfaction. This is part of their regular assessment. Third-party workers have less financial incentive and training to deliver Peloton gear with all the extra bells and whistles, Carroll said. Some customers have expressed frustration with XPO’s Peloton delivery process, especially on Reddit. Peloton tries to resolve customer delivery issues as quickly as possible, Peloton spokeswoman Amelise Lane told Protocol. XPO spokesman Joe Checkler said the scores for Peloton deliveries were between 95 and 100 out of 100. “We act immediately to rectify customer concerns whenever there is an issue,” said said Checkler.
But Carroll is troubled by what Peloton’s deliveries might look like without its warehouse. “To have this third-party service that’s going to make your customers less happy, that’s just not right for us,” Carroll said. “I think that’s what upset a lot of people.”
What’s next for Peloton and its ex-workers?
Former Peloton workers have varying hopes for the company. Carroll is concerned about the quality of the delivery. However, some may wonder how important delivery is when it comes to Peloton’s desirability. A personalized delivery experience is a plus, but that might not matter as much when it comes to buying the Peloton.
Murphy wants to see the company succeed and hire more people. He hopes the company will maintain its fair wages and transparent culture. “I really hope this continues and more employees can benefit from this culture that they started with,” Murphy said. Stetler, who says he “drank the Kool-Aid” and became a huge Peloton fan, would like to see Peloton bikes and treadmills marketed to the masses rather than as luxury items.
When it comes to their personal professional pursuits, many felt an outpouring of support after the series of viral posts on LinkedIn. A few said it would likely be easier for Peloton companies to find positions. They are generally more connected to LinkedIn and technicians are entering the candidate market. But Stetler said he felt some of the love: He landed supply chain-related job interviews last week.
Carroll casts a wide net, applying for jobs adjacent to Peloton as well as jobs in media production. Murphy had planned to use his Peloton salary to return to school in the fall. He is reassessing those plans now. The two said employees at the St. Louis warehouse are always in touch, helping each other find opportunities.
“We have the same needs because obviously we worked the same job,” Carroll said. “We lived the same lifestyle for a while, so might as well take care of each other.”