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Is the Buy-One-Give-One Model Dead? TOMS and the Future of Social Enterprises
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In 2006, TOMS defined what it looked like for a business to put people before profit. With their “One for One” give-back model, your purchase of a pair of canvas slip-on shoes sent a pair to someone in need.
But not anymore.
Scrapping their worldwide buy-one-give-one program, the trailblazing social enterprise recently announced their “⅓ profit for grassroots good” plan. TOMS now gives at least 30% of its profits to charities in the U.S. focused on promoting mental health, increasing access to opportunity, and ending gun violence.
So what does it mean when the organization that put the buy-one-give-one model on the map drops it for a more concentrated impact approach? While it’s too early to predict the ripple effects of the change-up, we believe TOMS will again disrupt the social enterprise sector — in a good-for-grassroots way.
Why Change? The TOMS Impact Method Needed a Re-Vamp
As soon as their signature Alpargatas shoes hit store shelves in 2006, TOMS became synonymous with do-good consumerism. Celebrities from Snoop Dogg to Anne Hathaway sported the canvas sneakers on airplanes and movie sets. A trip to Whole Foods wasn’t complete without bumping into fellow TOMS-sporting, social-good-savvy shoppers.
Business — and impact — boomed. By 2013, TOMS had donated over 10 million shoes to people in need around the world.
Still, a lack of innovation in the product and an easy-to-copy business model hindered TOMS’ ability to stay on top. Copycats with cheaper versions of the stylish slip-on cropped up like weeds. To add insult to injury, Skechers donated not one but two pairs of shoes for every pair of “BOBS” they sold and at a more palatable price point. Consumers took notice.
The simplistic shoe that gave back was a novelty no more. And the question of real, long-lasting impact mushroomed.
Socially conscious consumers realized that to truly lift up those in developing communities, people needed more than shoes to experience positive change in their lives.
TOMS eventually added sunglasses to their online shop, which aimed to give access to eye care in developing countries. They also partnered with coffee roasters, which in turn provided clean water to developing communities in need. But they never quite gained the necessary traction to solve the slump in sales.
Despite their pivot toward offering other products and subsequent pathways to impact, TOMS' brand recognition was pretty much just shoes. And in the end, providing people with shoes proved to be an unintentionally brittle and rigid model. It simply didn’t create the kind of long-term impact TOMS hoped it would.
Confronting their purpose as a people-before-profit company, TOMS had some serious decisions to make in order to salvage their brand while continuing to foster impact — an inherent characteristic in the organization’s DNA.
What’s So Special About TOMS' New Approach to Giving Back?
The shift from TOMS' buy-one-give-one model to donating 30% of profits is, in short, intriguing.
The company has essentially formed a mini foundation within their organization. They relied on the expertise of business industry, nonprofit, and philanthropic experts to assess where their money should be focused, not unlike the recent actions of philanthropist MacKenzie Scott.
They will also do things differently by giving those donations unrestricted. The organizations benefiting from consumers purchasing shoes and accessories won’t have to slog through lengthy application processes. Nor will they have to jump through any hoops to continue receiving funding. This is a game-changer for impact.
Changing up their give-back model is indicative of TOMS' maturity as a social enterprise. It shows they have learned there is a more effective way to create change as a business.
By abandoning their original model, TOMS is instead listening to the needs of communities (instead of assuming they know what’s best). All with a heightened focus on “building equity at the grassroots level,” according to their impact report.
Another interesting point to note is the three areas of focus to which TOMS will donate: Promoting mental health awareness, ending gun violence, and increasing access to opportunity. Though broad in their descriptions, these three areas are certainly relevant to today’s societal challenges.
But a question of motive still remains: Did TOMS want to capitalize on today’s issues to appeal to an evolving consumer? For example, Gen Z is famous for shopping their values. And after all, profit (and marketing strategies) still matter. Was their decision based on consumer demands or what they think are the most pressing issues of the day?
No matter the motivation, social enterprises and consumers will be watching with a keener eye to see if more impact is generated from TOMS’ new donation approach.
After the Buy-One-Give-One Model: The Future of the Give-Back Approach
The story of TOMS' pivot shines a light on the limited in scope and flexibility of the buy-one-give-one model. While TOMS no doubt had good intentions, the once-innovative model proved narrow and short-sighted.
But when TOMS announced their new 30% give-back approach, they ushered in a malleable and iterative way to drive impact. This tactic might change as areas of need inevitably change, too. Companies who follow suit will need to constantly reassess their social outreach. They should listen to their consumers, pay attention to the causes they care about, and connect with the people being impacted by the funds they're distributing.
It won’t be easy. TOMS may face marketing hurdles. After all, the buy-one-give-one approach was easy for consumers to digest. But we believe there is great potential for widespread, longer-lasting impact in doing things in the grassroots-for-good way. It prioritizes partnering with leaders in local communities to learn what’s truly important. And with unrestricted funding? The sky's the limit.
Key Takeaways for Social Enterprises From TOMS’ Latest Move
Social enterprises trying to establish their own operating model can learn a lot from TOMS — their beginning, where they’ve been, and where they’re going.
- Founder Blake Mycoskie started TOMS with the sole purpose of giving back and creating change through business. As a social enterprise, you must make sure you have an authentic mission, purpose, and vision. Otherwise, you’re aimless. TOMS’ purpose? To help humanity thrive. True, their pathway to achieving that has changed — drastically. But they’re remaining true to that original purpose with their new give-back model. Your task: Make your purpose an authentic one and stick to it.
- TOMS learned that their buy-one-give-one impact model wasn’t effective in creating long-term change. Many consumers also caught on, which was one reason for sagging profits. To avoid what happened to TOMS, make sure your give-back model is optimized for impact, not just profit. It doesn’t only matter that you give back, but how you do so as well. Your impact model matters, especially to today’s socially conscious consumers who can see right through a futile give-back approach.
- While it’s imperative you remain authentic to your mission and brand, innovation is equally important. Just because something works today doesn’t mean it will forever. TOMS fell from being a leader in the industry to one among the crowd because they didn’t iterate quickly. Innovating doesn’t mean you have to forget about what works well. It means you have to find a way to do it better.
- Keep your finger on the pulse. Culture progresses along with consumer buying behavior. Your organization needs to keep up. While TOMS didn’t bury their heads in the sand, they were too slow in reacting to market changes and buyer demands. Innovation and keeping up with trends go hand in hand.
Though there are outstanding questions on impact and how to choose which of today’s most pressing issues to tackle, one thing is certain for social enterprises: The right combination of innovation and staying true to your purpose will always win out.
As for TOMS' new give-back model, the potential for sustained change within today’s hot button issues is palpable.