'The sponsorship model is broken': On co-founder Caspar Coppetti on building a premium athletic brand that rivals the giants
For the Swiss athletic apparel company On -- known by many as On Running -- the focus has always been on being both premium and exclusive. According to co-founder Caspar Coppetti, the concept when it first launched in 2010 was "we want to be the most expensive product on the market." On's shoes retail for between $130 and $200 a pair. It took a few years, but the strategy worked out. In its most recent earnings report, On's quarterly revenue hit around $307 million and direct-to-consumer sales represented 38% of its business. Coppetti joined the Modern Retail Podcast this week and spoke about how the brand, best known for its running shoes, has tried to focus on growth while maintaining its brand integrity. "When you have a strategy, and it's a premium strategy -- it's a very simple strategy," said Coppetti. "You have to always keep supply below demand. Nothing builds desirability, like scarcity, right? And you have to be 100% buttoned up and prepared to walk away from things that could be good for business in the short-term but would hurt the brand long-term." For the first few years, this made things difficult. On walked away from some retail partnerships that likely would have jumpstarted business. But now, Coppetti said he's happy the company was so selective because it cemented On's name as a premium product. That helped make it a brand that athletes sought out. Tennis star Roger Federer, for example, is not only a spokesperson for the brand but an investor. And even beyond Federer, On is trying to take its athletic partnerships even further by offering new types of sponsorships and contracts. "The sponsorship model is broken," he said. "It's basically a duopoly, where two large brands control the market and they play very ugly games at the cost of the athletes." Despite the brand's early focus on exclusivity, Coppetti also spoke about the need to leverage key wholesale partners. The company is sold in thousands of individual running boutiques, as well as larger retailers like REI and Foot Locker. "We felt we needed the validation, not just [from] the best runners but also of the specialty shops," he said. Even with DTC representing over one-third of On's business, the company still focuses on growing retailer partnerships. What's more, Coppetti said that the two businesses aren't antagonistic; "they are very complementary and additive to each other," he said. "When we start working with a retailer, our online sales will go up in that area." Now, On is on an upward trajectory and expanding into new products and regions. According to Coppetti, this success was thanks to the company holding true to its values and keeping the big picture in mind. "It took a lot of discipline. But, you know, we're Swiss -- we're known for discipline," he said.