On Holding reported that direct-to-consumer sales now represent 33% of total revenue, up from 29% a year earlier, according to TradingView analysis of the company's recent earnings. The shift is deliberate: as wholesale growth decelerates across footwear, the Swiss running brand is opening more owned stores and driving traffic to its web channel, where it controls margin and message. Gross margin held at 59.5%, a premium-tier figure that would compress under heavy wholesale discounting.

The company operates 69 owned retail locations globally and continues to expand in North America and Europe, where running specialty is consolidating and department stores are cutting square footage. On's DTC channel lets it sell at full price longer, avoid channel conflict with wholesale partners, and collect first-party purchase data. The average order value online is higher than wholesale sell-through, and return rates are lower because the brand can control fit guidance and product storytelling at the point of sale.

Why this works: premium physical goods cannot sustain premium pricing through distribution partners who need margin and will discount to move inventory. On's customer pays for technical design and brand signal, both of which erode when the product sits on a sale rack next to commodity runners. By moving volume to owned channels, On preserves the price integrity that justifies its $150-$180 running shoe positioning. The DTC build also insulates the brand from retail bankruptcy and door closures, which have taken down wholesale-dependent footwear companies in the past three years.

The steal for a small brand: you cannot open 69 stores, but you can refuse wholesale terms that force you below keystone. Start with a Shopify site and a local event presence, then add one showroom or pop-up in a single metro where your customer density is highest. Use that physical space to capture emails and build a list you own, not a retailer's. If a store or distributor asks for 50% off wholesale and the right to discount further, walk. Your margin is your product development budget. Instead, offer exclusive colorways or early access to the direct customer, which creates urgency without a price cut. Run small-batch product drops on your owned channel, announce them to your email list, and let scarcity do the work. This is the same mechanism On uses at scale: control the offer, control the customer relationship, protect the margin.

The broader pattern is clear across premium physical goods: brands that invested in DTC infrastructure before 2022 are now seeing that investment pay in margin protection while wholesale softens. On is not abandoning wholesale, it is using owned channels to set the pricing floor and customer expectation, then allowing select wholesale partners to sell at that established premium. The next move is to watch DTC as a leading indicator for pricing power, not just a revenue mix shift.