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Since the inception of TOMS Shoes in 2006, the buy-one give-one business model has been widely embraced (and criticized) by consumers and businesses alike as an effective model for creating both commercial and social value. Blake Mycoskie founded the for-profit TOMS after a visit to Argentina, where he met children who were so poor that they had no shoes. Inspired to help, Mycoskie designed a shoe after the common Argentinian alpargata, and pledged that for each pair sold, TOMS would donate a pair to a child in a developing country. Donations were channeled through a nonprofit entity, Friends of TOMS, and were also coordinated through Shoe Drops, trips that took volunteers abroad to participate in giving. Since its founding, TOMS has donated more than two million pairs of shoes, with approximately one million of those pairs donated in the past two years alone.
The success of TOMS has encouraged other entrepreneurs, both social and otherwise, to adopt similar business models. Eyewear retailer Warby Parker, for example, has been tremendously successful, donating more than 100,000 pairs of eyeglasses to people in need. Younger enterprises, such as Soapbox Soaps and Two Degrees Food, are promoting buy-one give-one models as solutions to poor hygiene and childhood hunger. Online marketplaces, such as Roozt and Given Goods, host hundreds of brands that use a buyone give-one or similar model.
The buy-one give-one model has become widely popular, but serious questions have been raised about its long-term viability. Much of the success of these pioneers stems from their novelty. But as more and more businesses adopt the model, companies will no longer be able to use it as a differentiator, and the benefits of the model will likely diminish.
Questions have also been raised about the actual social impact of this type of giving, saying that it only alleviates the symptoms of a problem (lack of shoes or eyeglasses) and does not address the roots of the problem (poverty or lack of health care). Even though this issue is important, we don't address the question of social impact in this article. Instead, we focus on understanding the model itself and assessing its long-term financial sustainability to understand whether it is simply a fad or an effective new way for businesses and...