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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.
39.5% of net sales
in 2022 to
44%
by the end of 2024
220 basis point
improvement attributable to channel mix and reduced promotional activity
$1.26 billion
in 2022 revenue to
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.
Track your margin delta between wholesale and direct; if it exceeds 25%, one owned touchpoint pays for itself inside six months.
For the operator
Model three-year DTC revenue contribution at 10%, 20%, 30% mix; fund the channel that shows positive contribution margin by month eighteen.
For the house
Negotiate volume pricing directly with brands shifting DTC; their wholesale teams have new margin flexibility to protect large buyers and reduce retailer churn.
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.
200+authorized brands
70,000products · virtual proof on each
9 deskspublishing daily
1997one house, since
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