On Holding, the Swiss performance-running brand trading on the New York Stock Exchange, is steering revenue growth through its direct-to-consumer channel to expand gross profit margins, according to The Motley Fool. The company projects DTC will account for approximately 35 percent of net sales in 2026, up from 32 percent in 2024, driving gross margin improvement of 260 basis points year-over-year. The shift reduces reliance on third-party retail, where wholesale terms compress unit economics, and channels more volume through owned stores and the brand's web property, where full-price realization and customer data flow directly to the company.
On operates 68 branded retail locations globally as of the fourth quarter 2025 and continues expanding its footprint in North America and Europe. The brand also runs a subscription model called Cyclon, which ships a fully recyclable running shoe on a regular cadence and reclaims the prior pair for materials recovery. Both the retail network and the subscription program feed first-party purchase data into inventory planning and product development, tightening the feedback loop between customer behavior and assortment decisions. The Motley Fool notes that DTC expansion allows On to test new colorways and limited releases without negotiating shelf space or promotional windows with retail partners, preserving brand positioning and avoiding the markdown calendar that governs wholesale distribution.
The mechanism behind the margin lift is structural. Wholesale terms typically require 50 to 55 percent off suggested retail to cover the retailer's margin, logistics, and promotional risk. DTC captures the full retail price minus only the brand's own cost of fulfillment, customer acquisition, and return handling. At scale, that spread drives gross margin into the mid-60s for owned channels versus mid-40s for wholesale, according to investor presentations cited by The Motley Fool. The brand also retains pricing control, avoiding the race to discount that wholesale partners initiate during seasonal clearance. On reported net sales of CHF 2.1 billion in 2024, with gross margin of 60.1 percent, and expects gross margin to reach 62 percent in 2026 as DTC mix rises and supply-chain efficiencies compound.
A small physical-product brand can run the same play without opening storefronts. Build a Shopify site with clean product pages, high-resolution imagery, and customer reviews, and drive traffic through organic social content that documents the product in use. Allocate 15 percent of monthly revenue to paid acquisition across Meta and Google, targeting lookalike audiences based on prior purchasers. Price the product at full retail on your owned site, then offer wholesale terms only to retail partners who commit to minimum order quantities and agree not to discount below a floor price within the first 90 days. Use email and SMS to convert one-time buyers into repeat customers, offering early access to new releases and colorways before wholesale partners receive inventory. Track contribution margin by channel weekly, and shift inventory allocation toward the channel that delivers the highest net dollar per unit. If wholesale partners push for deeper terms, hold firm or redirect that inventory to owned digital, where you control the narrative and the margin. The incremental cost to fulfill a DTC order is often $8 to $12 per unit including shipping, far below the 50 percent concession required to land on a retailer's shelf.
On's playbook confirms that margin expansion does not require volume sacrifice. The brand grew net sales 30 percent year-over-year in 2024 while increasing gross margin, proving that owned distribution can scale profitably when acquisition cost remains disciplined and repeat purchase rates climb. The lesson for any physical-product marketer is that channel mix is a margin lever as powerful as cost reduction, and DTC remains the highest-return path when customer acquisition efficiency holds.
On Holding lifted gross margin 260 bps by shifting 35% of sales to owned retail and web, capturing full-price realization without wholesale concessions.
The branded-identity layer Chiefs of Staff and heritage CMOs route through — your name imprinted on real authorized stock, your pick of 200+ brands and 70,000 products, shipped from one accountable house. Nine editorial desks publish the intelligence those operators read before they sign.
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