# On Running Drove DTC to 44% of Revenue, Lifted Gross Margin 220 Basis Points in Two Years

*Swiss brand used owned channels to reduce wholesale dependency, protect pricing, and fund expansion without diluting premium positioning.*

By **Jenny Huang Goodman MPA MSc MHSA, Principal** — The Stash Edge, Hako Shikin LLC.
Published 2026-09-17.

Canonical: https://www.pops4.com/stash/articles/on-holding-2026-09-17t00-6
Subject: On Holding
Tags: dtc, distribution, margin expansion, premium positioning, owned retail, channel mix

---

On Holding grew its direct-to-consumer channel from **39.5% of net sales** in 2022 to **44%** by the end of 2024, according to the company's investor disclosures reported by TradingView. Over the same period, the running brand lifted gross margin from **58.9%** to **61.1%**, a **220 basis point** improvement attributable to channel mix and reduced promotional activity. The shift allowed On to maintain premium pricing and unit economics while scaling from **$1.26 billion** in 2022 revenue to **$2.39 billion** in 2024.

On executed the shift through owned retail expansion and ecommerce investment. The brand opened flagship stores in high-traffic locations — New York, Los Angeles, Tokyo, Zurich — and operated **62 stores** globally by year-end 2024. Each store served as a margin-accretive channel and a brand signal, reinforcing On's positioning as a technical product worn by serious runners. Simultaneously, the company invested in its ecommerce platform, personalizing product recommendations and shortening checkout friction. Both levers reduced reliance on wholesale partners, which represented **56%** of sales in 2024, down from **60.5%** two years prior.

The mechanism is margin control. Wholesale partners typically demand **40-50%** off wholesale price and frequently discount at retail to move inventory. DTC eliminates the wholesale margin cut and lets the brand set the final price. On reported an average selling price of **$160** per unit in DTC versus **$115** in wholesale, a **39%** premium. That gap funded store expansion, product development, and marketing spend without eroding operating margin, which held at **16.5%** in 2024 despite a **$400 million** increase in operating expenses. The model works because On's customer base — affluent runners willing to pay **$170** for a CloudMonster — tolerates full-price purchase when the brand experience justifies it.

A small physical-product brand runs the same play with three moves. First, identify your margin delta: calculate what you net after retailer or distributor margin versus what you keep selling direct. If the gap exceeds **25%**, DTC economics improve with scale. Second, open one owned touchpoint that signals brand credibility — a showroom, a pop-up, a booth at a vertical trade show — where customers can experience product and transact at full price. On spent **$8 million** per flagship; you spend **$2,000** on a weekend activation or **$500/month** on a Shopify storefront with localized fulfillment. Third, build a retention mechanism that makes repeat purchase more profitable than acquisition: a subscriber-only product drop, a loyalty program with early access, or a referral loop that turns customers into channel. On's repeat customer rate in DTC exceeded **50%** by 2024; yours needs to hit **35%** to make the unit economics work at small scale.

The broader pattern is channel as moat. Brands that control distribution control pricing, customer data, and margin structure. On proved that premium physical products can migrate revenue mix toward owned channels without sacrificing growth velocity, provided the brand delivers enough perceived value to justify full-price purchase. The trade-off is upfront capital and operational complexity, but the payoff is durable margin expansion that funds every subsequent move.

## The takeaway

On shifted 4.5 points of revenue to DTC in two years, lifted gross margin 220 basis points, and protected premium pricing by owning the last mile.

---

## Publisher

**Hako Shikin LLC** — Virginia Beach, Virginia. Founded 1997. ASI 217876 · DUNS 18-204-6339.
Principal and author: **Jenny Huang Goodman MPA MSc MHSA**.

- Author: https://www.huanggoodman.com/about
- LLM context: https://www.pops4.com/stash/llms.txt
- MCP endpoint, for AI agents: https://mcp.pops4.com/mcp
- Client dashboard: https://dashboard.pops4.com/
- Catalogue: 70,000+ products, 200+ brands