On running is a Swiss company that aims to revolutionize the feeling of running. We delve into their business model to find out how they have moved from a traditional model to a subscription-based one.
We are launching a new section on our blog . Every three weeks we will comment on changes in the business model of companies that have caught our attention, either due to their commitment to the circular singapore whatsapp mobile phone number list economy, their search for new sources of income, significant changes in their value proposition, etc.
We will echo companies that have reflected on their business model and have undertaken profound internal changes to implement new sales and marketing strategies.
We start with On Running , a Swiss sportswear company that has opted for the circular economy and a novel revenue model to reach the market.
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 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.
And since the brand does not manufacture, what can be said about the impact that the decision has on its “Key Partners” in production, who have had to be fully integrated into the project in order to be able to deal with a circular business model like this one.
In this type of project based on the “product as a Service” models, the Circularity Canvas methodology can be applied , based on the same principles as the Business Model Canvas . It is an interesting methodology to reflect on the activities, cost structure and key associations in this type of project, to analyse the product flows, materials or waste generated, potential circularities derived from repair, reuse, recycling, etc. generated internally or externally, as is the case of ON Running and its production partners. Additionally, additional value propositions can be added to the main one. As an example, the Ikea “save the furniture” campaign.
Will we buy sneakers (and any other products) by subscription?
That property ownership is, if not in crisis, in decline is a fact. We are moving towards business models in which ownership plays a very minor role. In the world of fashion, there are already a good number of platforms that rent clothes. Why do we want a ten-year-old car if we can have a new one when we need it?
Time will tell whether this project is commercially viable. From a social and environmental point of view, it certainly seems so. Just for proposing such a different approach and making the effort to make it a reality, we wish them success.
If you want to not miss future publications or stay up to date with Aeroplano Lab news, subscribe to our newsletter:
