Heading into 2020, the U.S. fitness club industry was on a roll, with projections that it would reach $39 billion in the U.S., growing more than 2.6% over 2019. Then COVID-19 hit, shutting down the majority of the fitness industry. That included gyms but also fitness facilities in hotels and other businesses.
According to a TD Ameritrade survey published in July 2020, 59% of Americans said they didn’t plan on renewing their gym membership and 56% said they found more affordable ways to stay fit during the pandemic.
That shift to new ways of staying fit resulted in a boom for the home fitness market. The “Home Fitness Equipment Global Market Report 2020-30: COVID-19 Implications and Growth” predicted the home fitness equipment market would jump from $6.76 billion in 2019 to $9.49 billion in 2020. It actually topped $10 billion by most estimates. Sales of treadmills climbed 127% in the six months ending in November. Stationary bike sales rose 221% and free weights sales were up 97%.
For equipment manufacturers used to supplying gyms and hotels, COVID-19 was a devastating blow. Some, though, were able to pivot. Aviron is one of those, moving from a mostly business-to-business model to a direct-to-consumer (DTC) model. Along the way, it needed some help with its logistics, and found that help in existing logistics partner GlobalTranz.
“We were doing mainly LTL [less-than-truckload] shipping and then COVID hit last year … and our business slowed down,” Andy Hoang, founder and CEO of Aviron, told Modern Shipper. “We tried to pivot as fast as we could — a little slower than we wanted — but by July we [entered] the home market.”
Aviron provides what it calls an interactive smart rower. The rowing machine offers animated video game competitions and strength-building programs that motivate users.
The shift to a DTC model was part of Aviron’s plans, but COVID accelerated it. Without a large portion of its clientele — gyms and hotels — Aviron needed to quickly solve the treacherous last mile if it wanted to survive.
“We went from doing dock to dock and LTL, which was relatively straightforward, to shipping to people’s homes, some of which was in high rises,” Hoang said.
Fortunately for Aviron, GlobalTranz was already providing support for about 80% of the company’s shipments. It also helps that the Aviron product doesn’t require much setup. Hoang said the company has provided clear instructions and made setup easy for consumers, allowing it to reduce delivery costs. Still, delivery personnel need to bring the product into homes and unbox it, removing cardboard and other items used in shipping. Hoang said the company had to adjust packaging to facilitate ease of delivery.
The Aviron rower is shipped via container ship from Taiwan to Atlanta, where GlobalTranz facilitates the move from the port to Aviron’s U.S. or Canadian warehouses before final delivery. That delivery could be on an LTL carrier to a gym or via a final-mile provider to a consumer’s residence.
“One of the scary parts of going B2C is you have one shot, because if your product enters the market and it doesn’t meet on-time [delivery performance] or expectations … it can be the end of you,” Hoang explained. “We found that consumers are very tough, but at the same time, they are very understanding. And even if there are problems, if you communicate that in advance, [they are usually satisfied].”
Aviron was able to successfully manage its DTC transition in part because of the logistics expertise GlobalTranz, and specifically its Cerasis division, had in final mile. In January 2020, Globaltranz announced the acquisition of Cerasis. By the summer of 2020, GlobalTranz announced its Final Mile offering, leveraging Cerasis’ expertise in the space. The Final Mile offering utilizes GlobalTranz’s TMS, which has a built-in final-mile module that automatically pairs LTL linehaul carriers with properly equipped final-mile carriers from Cerasis’ network.
“GlobalTranz had enough interest across our customer base that we understood the industry was trending to a more emphasized focus on B2C and we recognized that growth opportunity,” Karen Tyndall, GlobalTranz’s director of customer solutions, told Modern Shipper. “For customers like Aviron that were in a B2B market, when they moved into a B2C market, we had to have that final piece.”
Tyndall said the final mile represents different challenges, from vehicle and weight restrictions in residential neighborhoods, to low-hanging power lines.
“It makes it very difficult for those common carriers to access those points,” she said, “so that’s where last-mile services come into play.”
Cori Allen, GlobalTranz national account manager, said as Aviron moved into the B2C market, GlobalTranz was positioned to help. The shift required engaging the Cerasis division, but “since that trust was already in place for us, it really was seamless,” she said.
Tyndall noted that other aspects of last-mile delivery are important in the process, including different insurance and cleanliness requirements, and not often thought about by traditional carriers.
“Many common carriers won’t deliver into a customer residence for that reason,” she said. “They don’t need to be faced with the liability of dirtying someone’s carpet or scaring baseboards. They are efficient when they are moving in and out of docks.”
Because of that, the last mile tends to be a more local service, and the connections and reach of GlobalTranz and Cerasis assisted Aviron in that regard.
“When you deal with a last-mile network, those providers tend to be much more regional in focus, and that allows them to tailor their focus and driver training to the specific products they will handle most often,” Tyndall said.
Allen noted it took about two months to get Aviron up and running, including incorporating Aviron’s needs into the Cerasis rating engine, and connecting GlobalTranz’s LTL electronic tracking notifications into the last-mile providers’ systems so customers can be notified of delivery delays.
“I think that is absolutely imperative,” Tyndall said. “If you think back to anything you’ve ordered online, as long as you’ve received a proactive communication from the vendor with an accurate tracking [notification] … that typically is all it takes to appease most people and leave them feeling confident that they are going to get their piece or pieces when they are supposed to get them.”
Hoang said having GlobalTranz manage the entire process has made it easier on Aviron to focus on what it does best — build quality products.
“They’ve grown in market share with our business because they are a lot easier to work with,” he said. “And when I say a lot easier, it’s [about] when there are problems … and having one point of contact in resolving issues definitely helps.”
Aviron was founded in 2016 and launched its first product in 2019.