Interview with On Ltd

As part of our study on the direct to consumer market, we spoke with various companies about their experiences. One of our interview partners was Samuel Wenger, Head of Direct to Consumer at On Ltd, which sells innovative running shoes and accessories via channels that include its own online shop.

Samuel Wenger gave us an insight into the benefits On gets from its own online shop, the goals it’s pursuing and the related challenges it faces.

You’ve had your online shop since day one. How important is the channel today?

The online shop is a key pillar of our multichannel strategy. It plays a central role and is constantly growing. It contributes significantly to our total revenue, but is far from being the largest sales channel in terms of volume. But this isn’t our goal. In the D2C space, we now have our first own branches, in addition to the online shop.

What is the main advantage of direct selling?

Our own online shop plays a key role when opening up new markets. It’s important to raise awareness of the brand in areas where no dense distribution network exists, and to guarantee availability there. The brand experience is of course also important. We want our sales channels to match our products. We can manage this best when we have everything under own control.

And, of course, we can learn a great deal about our customers and the effectiveness of our measures. For example, we can often see the impact of marketing measures quickly and directly. In the offline world, this rarely happens.

Margins are naturally also important. For this reason, we’re not looking to maximize the revenue from our online shop at all costs. Traffic is relatively easy to generate if you use targeted measures. But the costs involved eat away at margins and the impact is not sustainable.

There are challenges and conflicts when it comes to direct selling. Have you had negative reactions from your retailers, for example?

No, we haven’t actually. The online channel is accepted by retailers nowadays. We also had our online shop running from the very start. It’s only really availability that leads to debate now and then. There may be occasions when we’re still selling small numbers of an item in our own online shop, but our retailers can’t order it. Otherwise, the retailers tend to benefit from our work. We’re seeing this around our physical branches. The sales figures at our partners are also sharply increasing there.

In general, major growth is certainly challenging. This is especially true when it comes to our internal logistics. It’s not easy to keep up with infrastructure and processes to match the growth. Maintaining a consistent, high level of quality is challenging.

Are there features that you miss even now?

Comprehensive omnichannel options would be fantastic. For example, if we had Click&Collect with as many sales outlets as possible, or even with all of them. But we still have a long way to go before we reach the point of knowing the stock levels of our products at all of our retailers.

We also want to continue to improve the online advice we offer to help customers find the right shoes.

How important are marketplaces for you?

We have high expectations for all of our sales channels, particularly when it comes to the brand experience. Sales channels have to suit our brand. That’s not the case with all marketplaces. In particular, Amazon doesn’t have the options we need. So you won’t find us there. The only exception is Amazon Japan.

We frequently discuss whether Zalando would be suitable for us. But up until now, we’ve decided against it.

Otherwise, marketplaces are of course an important sales channel, such as Zappos in the USA.