Discover the fascinating story of ON, a Swiss brand revolutionizing the athletic footwear industry with its CloudTec technology and unique sneakers. Learn about ON's technology breakthroughs, founder's dedication to innovation, and the fierce competition it faces. Explore ON's potential for expansion into new market categories, from circular subscription models to catering to niche markets and transitioning into lifestyle and fashion. Delve into interesting discussions on revenue comparison, technology in sports, impressive gross margins, IPOs, and Roger Federer's investment earnings.
On targeted the triathlon market with an innovative running shoe designed for superior performance and comfort.
On positioned themselves as a premium brand with unique design features to capture a wider market.
On expanded their product line, internationalized their brand, and became a successful challenger in the running industry.
On has experienced impressive growth, with potential avenues for future expansion and a lucrative investment from Roger Federer.
Deep dives
Specialty Market Focus and Innovation
On initially targeted the specialty market of triathlon, offering a unique and innovative running shoe that combined speed and comfort. The founder, Olivier Bernhard, used a hose pipe prototype to create a shoe that provided soft cushioning, responsiveness, and propulsive energy. This design appealed to triathletes and long-distance runners who were looking for a shoe that could handle various distances and provide superior performance. They took a grassroots approach to distribution, partnering with specialized mom and pop stores and using unconventional sales tactics to get retailers to try their shoes.
Premium Spin and Adoption
To appeal to a wider market, On positioned themselves as a premium brand, focusing on unique design features that set them apart from other running shoe brands. Their distinct silhouette and technology, such as the cloud tech and responsive sole plate, captured the attention of runners who were curious to try something different. By offering a visually innovative product, they were able to generate interest and encourage adoption beyond their niche target market.
Diversification and Internationalization
As On gained momentum, they expanded their product line beyond running shoes, venturing into apparel and widening their focus from triathletes to other types of runners. They also internationalized their brand, signing deals in multiple countries and partnering with specialty retailers in key markets. Their strategy of diversification and international expansion allowed them to reach a wider audience and establish On as a successful challenger brand in the running industry.
Summary and Key Takeaways
On successfully captured the attention of the specialty market by offering a unique and innovative running shoe designed specifically for triathletes. Their grassroots approach to distribution and focus on specialized retailers allowed them to target their niche effectively. By positioning themselves as a premium brand with visually distinctive design features, they generated interest and expanded their customer base beyond their initial target market. Through diversification and internationalization, On solidified their position as a challenger brand in the running industry, offering a compelling alternative to established competitors.
On's Growth Potential and Expansion Opportunities
On has experienced impressive growth over the past four years, quadrupling its revenue from 500 million to over 2 billion. The company is outpacing the overall running shoe market, which is expected to grow 4% year over year. On has several avenues for future growth, including product expansion into apparel and other sports, geographical expansion, focusing on the Asian market, and distribution expansion, such as increasing their direct-to-consumer channels. Their strong gross margin of 59.9% and profitability since 2022 also contribute to their potential growth.
Roger Federer's Investment and On's Valuation
Roger Federer's 3% investment in On, which he made by buying stocks, could be worth around $250 million, as the company is currently valued at over $8.5 billion. This investment has proven to be lucrative for Federer, as his career earnings from prize money total around $130.6 million. On's recent IPO in 2021 also resulted in positive market reception, with the stocks initially priced at $24 per share.
Concerns and Potential Challenges for On
One potential challenge for On is the balance between maintaining their specialized performance brand identity while also expanding into the lifestyle market. As they continue to grow and diversify their product offerings, it will be important for On to maintain their technological leadership and avoid spreading themselves too thin. Another concern is the potential for changing fashion trends and the need to stay relevant in the increasingly competitive casual and leisure market. However, with their strong commitment to research and development and a focus on staying at the forefront of technology, On has the potential to navigate these challenges successfully.
Tap, tap... is this thing ON? Great, because we've got an exciting new Teardown episode for you!
In this latest podcast installment we're taking you behind the scenes of ON, the Swiss brand racing to the forefront of the athletic footwear industry. With its unique CloudTec technology and striking sneaker silhouettes, ON is a brand taking on the big players using design as a critical differentiator.
From its humble beginnings to its rise as a global contender, we'll explore how this innovative brand has made significant strides in a competitive market.
So tune in as Alen, Franz, and Tom discuss…
ON's technology and design breakthroughs, from the humble garden hose to innovative footwear.
How a founder's dedication to continuous innovation through experimentation keeps ON moving forward.
The David vs. Goliath battle ON faces in the fiercely competitive athletic footwear arena.
ON's enormous potential for expansion into new market categories.
So, get set and join us as we race through the story of ON - a business running on innovation, savvy leadership, and unique design.
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