On Strategy and Business Model

Executive Overview

On is a Swiss premium sportswear company best known for running shoes, but its strategy is broader than footwear alone. Founded in 2010 in Zurich by Olivier Bernhard, David Allemann, and Caspar Coppetti, On has built a global brand around performance innovation, distinctive design, and tight control over where and how the brand is sold. The company’s roots are in running, yet it now competes across footwear, apparel, and accessories for running, training, tennis, outdoor, and everyday wear. Its model combines a selective wholesale network with a fast-growing direct-to-consumer business through owned e-commerce and physical stores.

That mix matters. Wholesale gives On reach and credibility in specialty retail, while direct-to-consumer gives it higher gross margins, better customer data, and more control over the brand experience. Manufacturing is outsourced, mainly to partners in Asia, which keeps the company relatively asset-light but makes supplier management, product quality, and inventory planning strategically important. In FY2024, On reported net sales of CHF 2.3 billion. Footwear still drives the vast majority of revenue, but apparel, direct-to-consumer, and Asia-Pacific expansion are important priorities as On tries to scale from a premium running brand into a broader global sportswear company.

On at a Glance

Logo
Common name	On
Full legal name	On Holding AG
Headquarters	Zurich, Switzerland
Ownership	Publicly traded; dual-class ordinary share structure with Class A shares listed publicly and Class B shares held largely by founders and insiders
Ticker	ONON
Exchange	NYSE - New York Stock Exchange
Market Cap	$11.77B
Revenue (FY2024)	$2.32B
Founding / major historical milestones	Founded in 2010 in Switzerland; Roger Federer partnership announced in 2019; listed on the New York Stock Exchange in 2021; launched LightSpray in 2024
Industry or industries	Athletic footwear, sports apparel, sporting goods, direct-to-consumer retail
Key products or services	Performance running shoes, everyday premium footwear, apparel, accessories, tennis and training footwear, trail and outdoor footwear
Geographic footprint	Global; products sold in more than 80 countries, with net sales disclosed across the Americas, EMEA, and Asia-Pacific
Business segments as officially reported	One operating and reportable segment; management also discloses net sales by channel (direct-to-consumer and wholesale) and by region (Americas, EMEA, Asia-Pacific)
Company website	https://www.on.com

1. What Is the Strategy of On?

On’s public filings and investor communications point to a coherent strategy: stay premium, stay innovation-led, and expand from a running-first footwear brand into a broader global sportswear platform without becoming overly promotional or mass market. Using the Playing to Win framework, the strategy looks like this.

1. 1a. What is the winning aspiration of On?

   On’s aspiration is not simply to sell more athletic shoes. Management has consistently framed the company’s ambition as building a premium global sportswear brand rooted in performance, design, and a distinctive consumer experience. The company also describes its broader mission as igniting the human spirit through movement. In practical terms, “winning” for On appears to mean becoming one of the few global sportswear brands that can command premium pricing, maintain strong full-price sell-through, and expand beyond running into a wider set of sportswear occasions while still preserving brand scarcity and technical credibility.

2. 1b. Where does On play?

   On plays in premium athletic footwear and apparel, with running as the core entry point. It focuses on consumers who value performance, comfort, design, and brand identity and are willing to pay above mainstream price points. The company plays across direct-to-consumer and selective wholesale channels rather than fully open distribution. Category expansion has moved beyond road running into trail, training, tennis, outdoor, and all-day wear. Geographically, On is global, with reported sales across the Americas, Europe, the Middle East and Africa (EMEA), and Asia-Pacific, while the brand has been working to deepen its presence in high-potential urban and premium retail markets.

3. 1c. How does On plan to win?

   On is trying to win through differentiation, not cost leadership. Its formula combines proprietary performance technologies, distinctive product aesthetics, a premium brand position, and disciplined channel management. Rather than chasing ubiquity, On has generally used selective distribution to protect brand heat and pricing. The company then reinforces that with athlete validation, community-led marketing, and a growing direct-to-consumer platform that lets it control merchandising and storytelling. This is a brand and product strategy more than a scale-and-discount strategy.

4. 1d. What capabilities must On have in place?

   To make that strategy work, On needs a specific set of capabilities: advanced footwear and apparel innovation; strong design and product merchandising; athlete and consumer testing; premium brand building; an omnichannel retail engine; and disciplined management of outsourced manufacturing and logistics. Because the company does not rely on owned factories for its core production, supplier orchestration and quality control are strategic capabilities, not back-office functions. The same is true for digital commerce, since direct-to-consumer is both a revenue engine and a source of consumer insight.

5. 1e. What management systems does On require?

   On needs management systems that keep growth from eroding brand quality or operational discipline. Public disclosures suggest a strong emphasis on channel mix, gross margin, inventory management, product launch calendars, and regional execution. In practice, that means coordinated planning across product creation, sourcing, demand forecasting, logistics, wholesale sell-in, direct-to-consumer merchandising, and marketing. It also requires governance that can balance short-term growth with long-term brand equity, especially in pricing, promotions, and store expansion.

2. What Are the Current Strategic Initiatives of On?

Based on On’s FY2024 annual reporting, investor communications, and management commentary around recent results, the company’s current strategic agenda has several clear pillars.

• Expand direct-to-consumer. On continues to invest in owned e-commerce and physical stores. This is not just a margin play. Direct-to-consumer gives the company more control over merchandising, full-price selling, customer data, and brand presentation.
• Scale apparel from a smaller base. Apparel remains much smaller than footwear, but management has been explicit that apparel is a strategic growth vector. A stronger apparel business can raise wallet share, make On more of a head-to-toe brand, and reduce dependence on footwear alone.
• Broaden the product portfolio beyond core running. On is extending further into training, tennis, outdoor, and lifestyle-oriented use cases. The logic is to keep performance credibility while increasing the number of occasions in which consumers wear the brand.
• Accelerate Asia-Pacific. Asia-Pacific remains smaller than the Americas and EMEA, but it is strategically important for long-term global brand building. The opportunity is especially meaningful in premium urban markets where brand, design, and performance can support higher price points.
• Commercialize new innovation platforms. On’s 2024 introduction of LightSpray and the Cloudboom Strike LS showed that the company is still investing in product and process innovation, not just brand extension. These launches matter because they can create halo effects for the brand and potentially improve manufacturing efficiency over time.
• Maintain premium economics while growing. On is trying to keep gross margin strong, control markdowns, and manage inventory more tightly even as it grows rapidly. That discipline is central to the brand strategy; premium sportswear brands lose strategic coherence quickly if they become overly promotional.

3. What Is the Business Model of On?

On’s business model is straightforward on the surface but strategically nuanced underneath. It is primarily a premium product-sales model built around footwear, with apparel and accessories layered on top, sold through both wholesale and direct-to-consumer channels.

• What customers actually buy: Customers buy premium performance and lifestyle products, especially running shoes. The purchase decision blends technical performance, comfort, aesthetics, and brand identity.
• Revenue model: Revenue is generated mostly from one-time product sales, not subscriptions or long-term contracts. The core models are direct-to-consumer e-commerce, owned retail stores, and wholesale shipments to selected retail partners.
• Recurring versus one-time: There is little contractual recurring revenue. The business is repeat-driven instead. Running shoes wear out, active consumers refresh footwear frequently, and a good direct-to-consumer relationship can turn a single footwear purchase into repeat footwear, apparel, and accessory purchases.
• Why the channel mix matters: In FY2024, direct-to-consumer represented roughly 41% of net sales, with wholesale making up the balance. Direct-to-consumer generally carries higher gross margin and gives On richer customer data, while wholesale still matters for scale, specialty credibility, and market reach.
• How pricing power works: On’s pricing power appears to come from premium brand positioning, differentiated product technology, and channel discipline. The company is not trying to be the cheapest option. Its ability to hold price depends on sustained innovation, limited over-distribution, and strong brand desirability.
• Why the business mix matters: Footwear still generates the overwhelming majority of revenue, which gives On focus but also concentration risk. Apparel is strategically important because it can increase average order value, improve year-round relevance, and make the brand less dependent on shoe cycles alone.
• What drives gross margin, operating margin, and cash generation: Gross margin is influenced by channel mix, product mix, full-price sell-through, freight costs, foreign exchange, and sourcing costs. Operating margin depends heavily on marketing intensity, new store investments, and overhead leverage. Cash generation depends on inventory discipline, receivables management, and the fact that outsourced manufacturing keeps capital expenditure relatively low compared with a vertically integrated manufacturer.

In short, On is a branded consumer products company with a premium-positioned, asset-light model. That combination can produce attractive economics, but only if the company continues to innovate and avoids the discounting trap that has hurt many sportswear brands.

4. What Products and Services Does On Sell?

As of FY2024, footwear remained by far the most important business line. Apparel and accessories matter less today in revenue terms, but they matter disproportionately in strategic terms because they can make On more like a full sportswear brand and less like a single-category footwear company.

5. What Are the Key Competitors or Peers of On?

On does not need to beat every one of these players everywhere. Its challenge is narrower: keep winning with premium consumers and specialty channels while expanding category breadth without losing the product quality and brand focus that made it distinctive in the first place.

6. What Is the Marketing Strategy of On?

On’s marketing strategy is closely tied to its premium positioning. The company appears to rely more on brand building, athlete validation, and community engagement than on broad-based promotional activity. That approach fits the economics of a premium footwear and apparel business: the goal is to create desire and credibility, not just traffic.

• Brand marketing: On emphasizes a clean, design-forward, Swiss-engineered identity. The marketing message tends to focus on movement, performance, and feel rather than price promotion.
• Athlete and ambassador marketing: Elite athletes and high-profile partners help validate performance claims. Roger Federer has been especially important because he adds credibility, visibility, and product-development relevance rather than serving only as a celebrity face.
• Community and field marketing: Run clubs, race-related activations, store events, and local community engagement matter because On’s core consumer often wants to experience the brand, not just see it in an advertisement.
• Digital and performance marketing: Digital marketing supports traffic acquisition and conversion for direct-to-consumer, but the public record suggests it is used in support of brand building rather than as a discount-led demand engine.
• Channel marketing: Selective wholesale means merchandising quality matters. In specialty retail and premium wholesale, how the brand is presented in-store is part of the marketing strategy.

Marketing is not merely a supporting capability for On. It is a major differentiator because the company is trying to sell a premium movement-and-performance identity, not just a functional shoe.

7. What Are the Key Customer Segments of On?

On serves several overlapping customer groups, with the most important split being between the end consumer and the retail intermediary.

• Performance runners: This is the brand’s historic core. These customers care about cushioning, ride, weight, fit, and credibility within the running community.
• Premium everyday consumers: A large part of On’s growth comes from consumers who wear the product beyond workouts. They want comfort and a technical aesthetic that works in daily life.
• Adjacent sport consumers: Tennis, training, trail, and outdoor users matter because they expand the brand beyond running while staying within performance-led use cases.
• Wholesale partners: Specialty run stores, sporting goods retailers, premium department stores, and selected e-commerce partners are customers in a commercial sense because they buy inventory from On and shape local brand reach.
• Direct-to-consumer digital shoppers: These consumers are strategically valuable because On can learn from their behavior, cross-sell apparel, and build repeat relationships without a retail intermediary.

On appears reasonably diversified across end consumers rather than dependent on a single corporate account. The bigger concentration is category concentration: running footwear remains the core demand engine, even as the company broadens into adjacent use cases and apparel.

8. What Is the Sales Model of On?

On uses an omnichannel sales model built on two primary routes to market.

• Direct-to-consumer: This includes On’s owned websites and owned stores. By FY2024, direct-to-consumer represented roughly 41% of net sales. This channel offers better margin potential, stronger brand control, and direct access to customer data.
• Wholesale: On sells to selected retail partners, especially premium sporting goods chains, specialty run stores, and other curated retail accounts. Wholesale remains important for reach, consumer trial, and specialty credibility.

The structure is strategically balanced. Wholesale helps the brand scale without having to own every point of sale, while direct-to-consumer improves economics and customer intimacy. The risk, which On appears aware of, is channel conflict or over-distribution. If wholesale becomes too broad, premium pricing and brand perception can weaken. If direct-to-consumer grows too quickly without the right store economics or operating systems, margin gains can be diluted by complexity.

For consultants, this channel model creates many potential workstreams: store rollout economics, wholesale partner segmentation, pricing architecture, digital conversion, order management, and demand planning.

9. In What Geographies Does On Operate?

On is a global company. In recent reporting, it has disclosed sales across three regions: the Americas, EMEA, and Asia-Pacific. Products are sold in more than 80 countries, and the company’s operating footprint spans corporate offices, third-party manufacturers, logistics nodes, and owned retail locations.

• Americas: The Americas has been On’s largest sales region in recent reporting. The United States is especially important because it combines a large running market, strong premium consumer demand, and a meaningful direct-to-consumer opportunity.
• EMEA: EMEA includes On’s home market in Switzerland and broader European operations, where the brand’s design heritage and premium positioning resonate strongly.
• Asia-Pacific: Asia-Pacific is smaller today than the Americas and EMEA but is strategically important for long-term growth. The region offers room for brand building, premium retail expansion, and e-commerce penetration.

Operationally, Zurich is the corporate center, while regional commercial and support operations extend across North America, Europe, and Asia-Pacific. Manufacturing is outsourced primarily to supplier partners in Asia, especially Vietnam, with additional production in countries such as Indonesia and China. That means On’s customer geography is global, while much of its supply footprint is concentrated in Asia.

10. Who Are the Owners of On?

On is a public company listed on the New York Stock Exchange under the ticker ONON. As of its FY2024 annual reporting, the company had a dual-class share structure in which Class A ordinary shares are publicly traded and Class B ordinary shares carry enhanced voting rights. The co-founders David Allemann, Caspar Coppetti, and Olivier Bernhard remain the most important insider owners through that structure, giving founders meaningful influence over strategic decisions relative to their economic ownership.

That ownership model matters because it allows On to pursue a long-term brand-building strategy with less exposure to short-term market pressure than a single-class structure might create.

11. How Is On Organized?

The practical takeaway is that On looks less like a conglomerate and more like a focused branded-house business with centralized brand and product leadership supported by regional execution teams.

12. How Does On Operate?

On’s operating model is built around creating premium sportswear products, outsourcing most production, and tightly managing brand presentation across channels.

1. Product creation: The company identifies performance needs, design concepts, and consumer trends, then develops footwear and apparel through its product creation teams.
2. Innovation and testing: Designs are tested with athletes and consumers, refined for performance and comfort, and aligned with On’s technology platforms such as CloudTec and Speedboard.
3. Sourcing and manufacturing: Production is outsourced to third-party manufacturing partners, primarily in Asia. This makes supplier management, quality control, and planning central operating disciplines.
4. Inbound logistics and inventory deployment: Finished goods move through regional distribution networks into wholesale channels, e-commerce fulfillment, and owned stores.
5. Sell-through and brand execution: Products are sold through direct-to-consumer and wholesale, supported by marketing, community engagement, and visual merchandising.
6. Replenishment and next-cycle planning: Demand data flows back into the planning process for future product allocation, line planning, and inventory decisions.

The main operational performance drivers are product hit rates, supplier reliability, inventory discipline, on-time launches, full-price sell-through, and the ability to scale direct-to-consumer without losing service quality. Because On is asset-light, the biggest operational bottlenecks are not factory utilization but vendor concentration, freight reliability, and planning accuracy.

13. What Are the Growth Opportunities for On?

The most credible growth path for On is not a single breakthrough but a portfolio effect: keep expanding direct-to-consumer, add apparel and new sports categories, deepen global penetration, and sustain the premium brand engine that allows all of those moves to compound.

14. What Is the History of On?

• 2010: On was founded in Switzerland by former professional athlete Olivier Bernhard and entrepreneurs David Allemann and Caspar Coppetti.
• Early years: The brand gained early traction through running specialty channels by emphasizing its distinctive cushioning feel and visual design language.
• 2019: Roger Federer became an investor and partner, which raised On’s profile globally and supported product development and brand expansion, especially around tennis and lifestyle.
• 2021: On went public on the New York Stock Exchange under the ticker ONON, giving it capital and visibility to accelerate global growth.
• 2022 to 2024: The company scaled rapidly into a multi-billion-Swiss-franc business, expanded direct-to-consumer, and kept broadening beyond its original running niche.
• 2024: On introduced LightSpray and launched the Cloudboom Strike LS, signaling that advanced product and process innovation remained central even as the company got larger.

One notable feature of On’s history is what is not there: unlike some consumer companies, it has not relied on major acquisitions to build its platform. Growth has been overwhelmingly organic and brand-led.

15. What Are the Key Suppliers to On?

Suppliers are strategically important to On because the company outsources most manufacturing rather than owning a large factory base. In effect, supplier capability is part of On’s operating model.

• Footwear manufacturing partners: These suppliers assemble finished shoes, largely in Asia, and are critical for product quality, delivery timing, and scaling new models.
• Apparel manufacturers and textile mills: As apparel grows, fabric sourcing, garment construction quality, and lead-time management become more important.
• Materials suppliers: Foams, rubber compounds, engineered mesh, yarns, plastics, packaging, and other technical inputs directly affect comfort, durability, and product cost.
• Logistics and fulfillment partners: Ocean freight, air freight, warehousing, and last-mile delivery providers matter because On serves both wholesale accounts and direct-to-consumer customers globally.
• Technology and process partners: For innovation platforms such as LightSpray, manufacturing-related technology partners matter because they influence how quickly an innovation can move from concept to scaled production.

On does not publicly emphasize a long list of named suppliers in the way a hardware company might, but the structure is strategically important because supplier concentration, quality reliability, and manufacturing flexibility can materially affect growth and gross margin.

16. What Are the Key Brands Owned by On?

On is best understood as a branded-house company rather than a portfolio of separate brands. Most of the brand equity sits in the single On master brand, with product families and platforms serving as sub-brand architecture.

• On: The master brand is the central strategic asset. It stands for premium performance, technical innovation, and a clean design aesthetic.
• Cloud product family: Names such as Cloud, Cloudmonster, Cloudsurfer, and Cloudrunner are important because they help consumers navigate use cases and product tiers while reinforcing the broader brand architecture.
• The Roger: This line, associated with Roger Federer, bridges tennis, lifestyle, and premium brand storytelling.
• LightSpray: Not a standalone consumer brand in the same sense, but an important innovation platform with halo value because it signals that On is still pushing technical boundaries.

Branding is a major strategic lever for On, but it is concentrated in one premium global identity rather than spread across multiple acquired labels.

17. How Does the Supply Chain of On Function?

On’s supply chain starts with product design and demand planning, moves through outsourced manufacturing in Asia, and ends in regional distribution, wholesale fulfillment, and direct-to-consumer delivery. Because the company is growing quickly and sells premium products globally, speed, quality, and planning accuracy matter as much as unit cost.

1. Forecast and line planning: On decides what products to make, in what quantities, and for which channels and regions.
2. Sourcing and vendor allocation: Purchase orders are placed with third-party manufacturers and material suppliers, often well ahead of peak selling seasons.
3. Manufacturing and quality control: Supplier factories produce the shoes and apparel, while On manages standards, testing, and timing.
4. International logistics: Goods move by sea or air into regional distribution infrastructure.
5. Allocation and fulfillment: Inventory is allocated across wholesale accounts, owned stores, and e-commerce fulfillment operations.
6. Returns, replenishment, and end-of-season management: Direct-to-consumer returns, inventory rebalancing, and markdown control all affect profitability.

The supply chain matters strategically because On’s outsourced model creates both leverage and exposure. It reduces capital intensity, but it increases dependence on forecasting accuracy, supplier concentration, geopolitical stability, freight reliability, and disciplined inventory management.

18. What Is the Technology Strategy of On?

On’s technology strategy is notable because it is centered first on product technology and manufacturing innovation, and only second on enterprise software. The company is not trying to become a software platform; it is trying to use technology to build better products, stronger brand differentiation, and a more capable omnichannel business.

• Consumer-facing product technology: Platforms such as CloudTec, Speedboard, and Helion are central to how On explains product performance and justifies premium pricing.
• Manufacturing technology: LightSpray is strategically important because it goes beyond product storytelling into how products are made. If it scales well, it could influence speed, labor content, and design flexibility.
• Digital commerce and data: On’s direct-to-consumer growth requires strong digital merchandising, customer analytics, and demand visibility. These capabilities may be less visible than footwear technology, but they are increasingly important to competitiveness.
• Sustainability-linked technology: Material innovation and lower-impact production processes are part of the company’s broader brand and product agenda, especially where they can improve both performance and environmental footprint.

The strategic point is that technology at On is not a side function. It is a core part of the value proposition, especially when innovation can be translated into a superior consumer feel, a more distinctive aesthetic, or a more efficient way to manufacture premium products.

19. What Is the R&D Strategy of On?

R&D is important to On, even if the company does not present it with the same standalone prominence that a biotech or enterprise software company would. In practice, On’s R&D strategy is embedded in product creation, material science, biomechanics, and athlete testing.

• Build scalable innovation platforms: On appears to focus on a limited number of meaningful technology platforms that can support multiple product franchises rather than pursuing endless novelty for its own sake.
• Use athlete and real-world testing: Serious runners and elite athletes matter because they pressure-test whether the product claims hold up in real use.
• Advance materials and construction: Midsole compounds, upper materials, plates, cushioning geometries, and weight reduction are all areas where better engineering can improve both performance and perceived value.
• Expand into apparel thoughtfully: Apparel innovation is different from footwear innovation, which means On must build stronger capabilities in fit, fabric, layering, and category merchandising as it grows that business.
• Link innovation to manufacturability: LightSpray illustrates that R&D is not only about product feel. It is also about whether a new idea can be made at consistent quality and commercial scale.

The strongest inference from On’s public materials is that R&D is meant to deepen the brand moat, not merely refresh the assortment. Newness matters, but only if it turns into better product franchises, better economics, or stronger consumer attachment.

20. How Companies Like On Leverage Independent Consultants through Umbrex

Umbrex has grown a global community of over 8,000 independent management consultants based in more than 50 countries. These consultants are alumni of McKinsey, Bain, BCG, and other top consulting firms. Companies like On engage Umbrex when they need talent with the training these firms provide, but they do not need a full consulting team with all the overhead. Umbrex has consultants across strategy, operations, organization, marketing, sales, finance, technology, ERP, and AI. For a company with On’s mix of premium brand building, channel expansion, and supply-chain complexity, the most relevant projects are usually tightly scoped, data-driven, and cross-functional.

1. Direct-to-consumer growth strategy, including owned-store rollout economics, site selection logic, and e-commerce conversion improvement.
2. Apparel acceleration strategy, including category prioritization, merchandising architecture, and go-to-market design.
3. Asia-Pacific market expansion planning, including channel mix, localization priorities, and premium brand-entry sequencing.
4. Wholesale channel segmentation, including which partners to deepen, which to limit, and how to protect premium distribution standards.
5. Pricing and margin architecture work across footwear, apparel, regions, and channels to improve full-price sell-through and gross margin.
6. Supply-chain resilience and sourcing diversification, especially for concentration risk in Asian manufacturing and freight flows.
7. Sales and Operations Planning (S&OP) and inventory optimization to reduce stock imbalances while supporting growth.
8. Innovation scale-up support for new platforms such as LightSpray, including operating model design, business-case analysis, and factory-readiness planning.
9. Customer segmentation and lifetime-value analytics to sharpen acquisition, retention, and cross-sell strategies in direct-to-consumer.
10. ERP, planning-system, and data-platform improvement work to connect product creation, sourcing, merchandising, and omnichannel demand data.