About On Running.
Will we buy sneakers (and any other products) by subscription?
About On Running.
On Running (On) was born in the Swiss Alps in 2010 by Olivier Bernhard, two-time world champion in long-distance duathlon. The basic objective of the project was to revolutionize the feeling of running, based on a soft landing of the stride and an explosive take-off (land soft, push off hard).
Since then it has become a global running brand with a presence on five continents.
From paid sneakers to monthly subscriptions.
In autumn 2021, On intends to give its business model a new twist by launching the first sports shoes that are delivered on a subscription basis and cannot be purchased. The shoe is fully recyclable. The idea of the project is none other than to serve its subscribers a pair of shoes called Cyclon (for the sake of the circular economy) for a certain period of time (or rather, a certain use). The useful life of the shoes is estimated to be around 800 km, so the brand assumes that the replacement of the shoes among its subscribers will be biannual. But the novelty lies not only in the sale by subscription but also in the fact that the brand is committed to collecting used shoes and fully integrating them into the production process of future units. This project is a clear example of the circular economy.
On running provides its subscribers with shoes called Cyclon (for the sake of the circular economy) for a certain period of time (or rather, a certain use).
The transformation from a traditional revenue model such as the distribution and marketing of sports shoes through specialized establishments (whether physical stores or digital establishments) to a subscription revenue model has enormous implications for the company's business model . It is true that subscription revenue is limited exclusively to one model of shoes, however, it still implies a huge change in mentality at a business level.
We have proposed the business model derived from the implementation of a subscription payment by applying the methodology of the business model canvas by Alexander Osterwalder, Yves Pigneur ( Strategizer) . As stated, the paradigm shift is enormous in every sense: it affects all the canvas modules, not just the revenue structure.
On the right side of the canvas, the changes are profound. The value proposition is affected by a product that not only goes deeper into the brand's initial proposition (land soft, push off hard), but also fits in with a customer profile that is more environmentally conscious and concerned about the growing generation of waste from the current economic model (the shoes are 100% recycled, they are completely white and no dyes are used, they are made from castor beans).
Marketing channels and customer relationships are completely singapore whatsapp mobile phone number list transformed. From selling footwear through points of sale (physical or digital), the brand is moving to a subscription model managed entirely through the brand's own website. Similarly, customer relationships require acquisition strategies that allow the brand to reach a minimum number of subscribers that make the project viable.
But that's not all. The change to a subscription model through the website itself creates a direct and long-term relationship with the customer. It is no longer a one-off sale, there is no longer a single transaction. A bond has been established that must be nurtured.
Probably the only module of the canvas that is not affected is the one related to customer segments. They continue to target a group of amateur runners who train intensively and who want a lightweight shoe with little drop.
The sources of income are probably the most visible change but probably not the most substantial.
On the left side of the canvas , where all the elements that define the operation of the company are located, the adaptation of costs and activities necessary to cope with a new subscription-based model is also very profound.
As regards key activities, reverse logistics is of course a key activity. The brand undertakes to collect used shoes at the same time as new ones are delivered and to send them to its production centres for recycling. On does not manufacture directly, but rather through partners located in Eastern Europe (Lithuania) and South-East Asia (Vietnam). Sports footwear production takes place in Vietnam, so the company undertakes to send used shoes to these production centres.
Design has been an important part of the company's strategy since its inception, but in the face of a circular economy project like this one, it takes on greater importance . In addition to high expectations of performance and quality, there is the use of natural fibres, the elimination of dyes, the need for 100% recyclable materials, etc.
