2012-04-10

Co.Exist

The Broken "Buy-One, Give-One" Model: 3 Ways To Save Toms Shoes

Toms has built a popular brand around the buy-one, give-one model. But two critical flaws in that model threaten to undo its social impact and business successes.

Today, April 10, thousands of people will go barefoot around the world for the second annual "One Day Without Shoes." It’s an event organized by Toms Shoes—the company that built a brand around the buy-one-give-one charity model—to raise awareness about the impact a pair of shoes can have on a child’s life.

But the day will also shine a light on the Toms model, which is facing two existential flaws that threaten to undo the company’s social impact and business success.

First, the Toms buy-one-give-one model does not actually solve a social problem. Rather, the charitable act of donating a free pair of shoes serves as little more than a short-term fix in a system in need of long-term, multi-faceted economic development, health, sanitation, and education solutions.

"What’s wrong with giving away shoes?" you might be thinking. "At least they’re doing something." The problem, we’ve learned, is when that "something" can do more harm than good. As Time recently noted, an increasing number of foreign aid practitioners and agencies are recognizing that charitable gifts from abroad can distort developing markets and undermine local businesses by creating an entirely unsustainable aid-based economy. By undercutting local prices, Western donations often hurt the farmers, workers, traders, and sellers whose success is critical to lifting entire communities out of poverty. That means every free shoe donated actually works against the long-term development goals of the communities we are trying to help.

The fact is, Toms isn’t designed to build the economies of developing countries. It’s designed to make western consumers feel good. We can see that in the company’s origin story, as the Toms website proudly tells it, in which founder Blake Mycoskie saw the problems barefoot children in Argentina faced and decided to start Toms. Mr. Mycoskie didn’t ask villagers what they needed most or talk to experts about how to lift villages out of long-term poverty. Instead, he built a company that felt good and that was good enough for him and Toms’s nascent consumers.

And that brings me to the second flaw. From a business perspective, Toms is at risk. Our research with leading consumer-facing companies has shown that there is a finite and unpredictable market for the feel good value proposition—consumers are fickle when it comes to committing to brands based on nonfunctional attributes. Toms’s core value to its customers is being replicated by an increasing number of companies who can promise the exact same return: feeling good about your purchase. Without a stronger, more differentiated and less replicable product offering, Toms will likely fall out of fashion in the coming years.

And therein lies the real peril. Those "helped" by Toms are, in the long-term, no more able to afford shoes or address the real social, economic, and health issues that they face than they were before. Once their free shoes wear out in a couple years, the children Toms "helped" will be just as susceptible to the health and economic perils associated with bare feet as they were before.

Toms can do more and do better. In the run-up to "One Day Without Shoes," I challenge the company and its consumers to do three things:

  1. Better understand the problem: The Toms website points out that those without shoes are at risk of contracting hook worms and suffering from other debilitating injuries and diseases. But a new pair of shoes alone will not eradicate hookworm or protect thousands living in landfills from harm. Toms needs to find out what will. There are surely more cost-effective, enduring solutions that will help those in need not only cover their feet, but also be able to afford shoes and other necessities that improve quality of life in the long term.
  2. Create a solution, not a band-aid: Toms has donated more than 1 million shoes to date. But to what end? Rather than asking "How many shoes can we give away?" Toms should be trying to figure out "How many lives can we change?" One statistic cited by the company is that there are 30,000 people living in one landfill in the Philippines. For these individuals and families, a free pair of cloth shoes is nice, but bare feet may be the least of many challenges they face on a day-to-day basis, none of which will be resolved by a pair of Toms. It’s the difference between a quick-fix and a cure.
  3. Innovate business models, not marketing campaigns: The buy-one, give-one model is clever, simple, and consumer-friendly. But the real impact of business often comes behind the scenes and without the sheen of a marketing campaign. Toms should ask: How can we use the whole of our business—including our jobs, our supply chain, our market penetration—to make a difference? I think Oliberté Shoes is really on to something with their approach, in which they manufacture shoes in developing countries and provide an economic boost where it’s needed most.

I imagine a Toms that creates jobs and builds economies by sourcing shoes from developing countries, small businesses, and burgeoning entrepreneurs. I imagine a Toms that eradicates hookworms within an entire country by giving not only the gift of shoes, but also the lasting impact of infrastructure and health facilities.

The world doesn’t need another advocacy day. We don’t need a day without shoes. We need practical, long-term solutions—the kind that only business can engineer. The good people at Toms should keep their shoes on. They’ll need them if they’re going to find solutions to these intractable problems.

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186 Comments

  • Tyler Johnson

    Picking on a profitable company because they have a charitable arm that is quite sizable and is making a difference in thousands of individuals. Yes the difference or benefit is small but not to the feet of those that got the shoes!

    In my business when one of my employees comes to me with what they see as a problem they need to come with a proposed solution otherwise it's considered just bitching and that is not allowed. You have no solutions to offer! Maybe that can be your next article!

  • Brad Larino

    Great article! I've been saying the same thing for years, giving presentations and writing papers in my college classes, watching the faces of my peers slowly become unsettled, some of which with a pair of Toms on their feet. Oliberté Shoes is a fantastic brand with quality products: however, not exactly in the same price range as Toms. Indosole; however, offers shoes for comparable prices to Toms with a more socially conscious business model that employees Indonesian artisans to craft shoes while using the rubber of re-purposed tires (different from recycling because these tires in their original state) to form the soles of their shoes. I have a pair of both, and must say that Oliberté is definitely worth the extra money. I have had both my Indosoles and Oliberté's for years and the Indosoles have seen far better days whereas my Oliberté's are in fantastic condition - truly a quality product. SoleRebels is another brand that I am looking into, it's fair trade and locally organized!

  • The notion that one can't do anything unless one does everything is full of - being empty-headed. Try again. This time try thinking. (Involves accurate observation, some strong degree of logic, subtlety at times; and focus. E.G., getting to the Big Picture - without letting it ride roughshod over, or crush small efforts that are intrinsically good.)

  • TOMS took the first step. And a risky, big high-subsidy step too, weighing heavily on profits. It was & is an extraordinary private endeavor, providing a pro-health positive that was otherwise lacking.

    As to disrupting local economies - pigfeathers! Those who get free shoes are those who couldn't at all afford to buy shoes in the first place. Thus there is no revenue drain on local manufacturers of footwear.

    Why not try a Day Without Shoes yourself? Take a walk down any road (not some cushy path) for just one simple mile and then ask if what TOMS does is good or right.

    The proof is in the pounding. On the road, not on the keys. Real life.

  • Jeremy Pooley

    This is a thoroughly uneducated and unnecessarily critical article. Toms does what it can. It does not have billions of dollars to solve the mega-problems. These challenges can only be solved bit by bit. And quite frankly anything that is done by anyone is more good than bad.

  • Stroop Wafel

    You're imagining a Toms that is doing exactly what you critiqued it for earlier-- sticking its nose where it doesn't belong. In a place where no shoes = no education, Toms is helping to give children a chance. Perhaps it's designed to do just that and that's all it needs to do. Everything else is up to charity.

    However, Toms provides shoes, sight restoration and clean water around the globe. Somehow that's not good enough? It's actually extraordinary.

    I've bought/gifted shoes as a gift because I really just wanted to donate. But the last 4 pairs of Toms I bought are on the shelves in the closet. I bought them because they're reliable, cute shoes. Wedges, sneakers and ballet flats. Brand loyalty is out there.

  • It i so easy to be an armchair critic; much harder and impactful to actually do something. Could Mycoskie take it to the next level and use Toms to impact real socio-economic change? Sure, and I've read recently that he is in fact building factories in the countries that he is serving with shoes right now. But to say that his 'buy one give one' model, or the companies One Day Without Shoes event is without value is akin to saying that Doctors Without Borders, or the International Red Cross is a failure because they are not changing the health system or infrastructures of third world companies. Come on. As a mother of 2 girls, what they have learned from philanthropic companies like this has been priceless. To give without expecting? To become aware of the millions of kids who walk around wothout shoes and contract deadly diseases? To put their money where their mouth is? We are raising socially conscious kids with real values because of companies like Toms and people like Mykoskie

  • Isaac Equality Brown

    I doubt giving a pair of shoes to folks who can't afford any based on the local market price is that harmful...in actuality many of these people rely on needing to travel in far distance in mixed terrains to reach a destination to work or go to school and THAT is what builds an economy. Also it is a stretch to say that TOMS business model wasn't based on research or collaboration with the communities they donate to.

  • Caleb Flint

    I think this article attacks the "feel-good consumer funding" approach too much (I think it has its place and can be used for sustainable impact), but overall I think the author nailed the twin issues of sustainability and self-reliance very well.

  • Caleb Flint

    While I do think that this article attacks the "feel-good consumer" funding approach too much (I believe that it has its place and can leave a positive, lasting impact when used appropriately), overall I feel that the author nailed the key issues of sustainability and self-reliance.

  • Phillip Beard

    I love how the author points out that Toms isn’t designed to
    build the economies of developing countries. The article points out that the
    company is only designed to make western consumers feel good. The founder
    didn’t talk to villagers about their needs  or talk to experts about how to solve
    long-term poverty. Instead, [he] built a company that “felt good and that was
    good enough for him and Toms’s nascent consumers.” I appreciate the authors
    suggestions for solutions to understand the problem and execute on a solution. 

  • "ONLY designed to make Western customers feel good"?

    Did you read the article, or just the headline? Although quite critical of TOMS, it clearly stated that shoes were/are given away in great quantity.

    You're lucky I don't own the company or you'd be in court yesterday for libel. And tomorrow, you'd be sans house, with only the shirt on your back - and no shoes.

  • Matt Karlsven

    While I don't necessarily agree with how Toms is carried out, I think this article is lacking in pointing out the strengths Toms has that could be leveraged for a better impact than what they are currently doing.  If Toms changes to doing something less tangible to the consumer (for instance, if the money you spend on a pair of shoes doesn't go to an individual child, but to a collection of money used for a factory that is much less lovable to an average consumer) that could mean the end of the Toms popularity.  We can't forget that even the best ideas need to be marketable to be successful on a large scale.

    I do agree with #1 in this article.  Better understanding the problem could lead Toms to stumble upon a solution that could preserve their popularity and marketability, as well as have a more lasting positive contribution on the areas they want to improve.  

  • Trevor Morgan

    It renews my faith in people to see them trying to solve world problems in an effective, truly selfless way. It's more than a PR campaign, or at least it should be. Hopefully Toms can get on board with all the other organizations that are efficiently and effectively improving the world.

  • Ian Baenziger

    Toms effort is the equivalent of giving a man a fish. Thats why I love the reference to Oliberté Shoes and their efforts. When Americans hear about factories in undeveloped countries, they usually think of sweat shops with slave-like conditions and terrible pay. However,  factories jobs in underdeveloped countries are among the most coveted jobs by the poor (heres why: http://www.nytimes.com/2001/04... ). 

  • Angela Bennion

    Excellent points made. I admit that I bought Toms years ago, but my main motivation was that they were in style and popular.  And I justified the $40 by thinking I was helping a poor child.  TOMS could really be a great thing if it finds a way to making lasting impact, instead of their current hand-out model. 

  • rsommer

    Toms Company is a good
    idea with negative affect. Companies like Toms provide research opportunity and
    provoke thought on how to make such donation more effective. Tom could have the
    same opportunity cost of giving up the "price" of producing one pair
    of shoes and investing that money into the economy of such places and has
    tremendous impact. This would help the farmers and producers to get on their
    feet and be more effective, thus raising the ability to consume. With more
    refinement this idea could have a tremendous impact on the people living in
    these areas. This would be the difference between doing good, and being
    charitable. 

  • rsommer

    Toms company is a good idea with negative affect. Companies like Toms provide research opportunity and provoke thought on how to make such donation more effective. Tom could have the same opportunity cost of giving up the "price" of producing one pair of shoes and investing that money into the economy of such places and have tremendous impact. This would help the farmers and producers to get on their feet and be more effective, thus raising the ability to consume. With more refinement this idea could have a tremendous impact on the people living in these areas. This would be the difference between doing good, and being charitable.