Published17. January 2024, 6:18 p.m
Juicy margin: On charges eight times the production costs for its shoes
The running shoe manufacturer On, like numerous other companies, has its shoes produced by the same manufacturer in Vietnam, but charges significantly higher prices for customers. Adidas and Puma also earn less.
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On is criticized for its high margins.
20min/Taddeo Cerletti
The company has the shoes manufactured in Vietnam and pays the producer less than the competition, but demands significantly more from customers.
Photo by Francois Le Nguyen on Unsplash
Roger Federer is also part of the sports company.
20min/Taddeo Cerletti
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On pays the Vietnamese producer the least.
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However, the margin is the highest compared to the competition.
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There are still quality problems with the shoes.
The Swiss manufacturer On became a global brand with its running shoes. The company, in which Roger Federer also has a stake, is worth the equivalent of over six billion francs. The founders became multimillionaires when they went public in New York.
On has his shoes manufactured in Vietnam. That is why they are not allowed to wear the protected Swiss cross in Switzerland. Thanks to production in Asia, the group saves massive costs, as research by the consumer magazine “K-Tipp” reveals.
On charges up to twenty times the production price
For example, the company pays the producer just 17.86 francs for the “Roger Advantage” model. On then sells the shoe in the online shop for 190 francs. Even after deducting freight and customs costs of 1.62 francs and VAT of 15.39 francs, On still receives a fat margin of 155.13 francs. However, part of this still flows into sales, marketing and human resources.
The difference between the manufacturing costs and the selling price for hiking boots is even more extreme, as confidential customs data shows. The “Cloudtilt Loewe” model costs 20.80 francs in Vietnam, but in the On shop the price rises to 445 francs per pair, more than 20 times as much.
On pays the least and charges the most
The research also shows that although other companies also skim off high margins, the difference at On is particularly high. A comparison of dozens of models shows that the company charges its customers eight times the production costs on average. At the German manufacturer Meindl it is five times as much, even though the shoes come from the same manufacturer in Vietnam, and at Puma and Adidas it is around four times as much.
On pays producers the least and demands the most from consumers. In addition, the quality of On shoes is always something to talk about. Doctors warn of health risks because the shoes are too soft, and consumer protection says it keeps receiving feedback about quality problems. A seller of On shoes says about the K-Tip: “On shoes are classic disposable products.”
This is how On explains the high margins
Bianca Pestalozzi is the head of European operations at On. She tells SRF that the margin is the result of innovation, marketing, distribution, logistics and the product. In Switzerland, for example, there is a dedicated warehouse, which many other brands do not have. This means On can deliver the shoes to the customer’s home within 48 hours. All of these factors would have a certain price.
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2024-01-17 18:18:42
#charges #times #production #cost #shoes
