In an isolated action, Nautilus is selling off about 1,000 of the NE 1000 series ellipticals introduced at last August's Health & Fitness Business show at discount warehouse retailer Costco.
"This is not a strategic plan," President Kevin Lamar told SNEWS. "Once they're done, they're done."
He said there were some design problems with the first 1000 series models, leaving the company with several choices to get through the inventory before the 2003 show next month. The company turned to its retailers and asked them if they wanted, for example, to lower prices dramatically to blow them out or to do a one-time sale at a discounter. Either way, the goal was to get rid of the stock so new models to be introduced next month could be the stars and sold without confusion.
"It's a chance to alleviate ourselves of problem product," he said. The problems had nothing to do with the ride or mechanics, but more to do with aesthetics and exterior design.
The NE 1000 model -- list price of $1,700 according to the company website â€“ is selling only at select Costco stores for $900 and is not on the store's website for broader sale. They began selling at the store in the last 30 days, just began shipping, and will be out-of-stock in the next 30 days. The NE 2000 and NE 3000 models (lists respectively of $2,200 and $2600) had a chance to be retooled and will be relaunched at next month's show, as will a new 1000 model with changes made to things like the display and the handles.
Although there is some danger of dilution of the strong Nautilus name by having product at a discounter like Costco, Lamar told SNEWS the company made sure every product at the Costco outlets was in perfect working order to ensure the product wouldn't leave customers with a bad taste. He said every single one of the ellipticals sold there have been individually unpacked and been given a thorough quality-control inspection and are guaranteed in top working order.
"Costco is a good customer of ours," Lamar said, although that usually doesn't include Nautilus product. "Typically, they're a seasonal customer. They don't like to have product too long."
SNEWS View: SNEWS actually stumbled past the Nautilus machines in the center seasonal area at Costco (SNEWS shopping at Costco? Nah, just doing researchâ€¦.). We stopped in our tracks in surprise. Next to it was a HealthRider treadmill, not exactly a competitor of Nautilus' in most equipment categories and a company not unexpected at Costco as Nautilus is indeed unexpected. We did test-rides of the 2000 and 3000 models at last year's show and found them superb, and apparently this lower-end model was similar but retailers didn't like the heights and placement of some features. Still, we hope there aren't repercussions to Nautilus, its name or the broader industry since consumers these days are becoming so discount-happy that they nearly refuse to buy without deeply slashed prices. And that worries economists and others who observe buying habits and their relationship to the health of the economy.