13 Pros and Cons of the One-for-One Business Model

TOMS Shoes is often given credit for starting the one for one business model, which is sometimes called the buy one, give one option. It is a form of social entrepreneurship that Blake Mycoskie encourages as customers can receive a product that they need while also providing help to someone in need. Mycoskie founded TOMS Shoes in 2006 and began donating a pair of shoes to a child in a developing country for every item sold to a customer.

There are other significant brands that follow this trend. Warby Parker will donate eyeglasses to people in need when customers make a purchase. There are options that help with hunger and hygiene through companies like Two Degrees Food and Soapbox Soaps respectively.

Proponents suggest that the one for one model is a viable way to create more social and commercial value in society. Consumers tend to place a higher priority on brands that attempt to help those in need. Critics suggest that these actions use poor households as a marketing opportunity, especially if there is a lack of transparency in the giving model.

There are several pros and cons of the one for one business model to consider.

List of the Pros of the One for One Business Model

1. The list of things that companies can donate is enormous.
There are a few different one for one business model propositions that you’ll find operating today. Bridgeway Capital Management takes the easy route, saying that they’ll donate half of their profits to charity. United By Blue tells its customers that they’ll remove one pound of trash from waterways and the oceans for every product sold. If you shop Cotapaxi for products, then they’ll provide a donation that pays for a week of tutoring at a community center in Kenya.

If you start a business using this model, then you can pursue charitable work that drives your passion. It could be clean water, better farming methods, or a cash donation to your local Boys and Girls Club. TOMS Shoes expanded its offerings to include coffee and eyewear.

2. There are fewer barriers to entry to worry about with this option.
If you are starting a business using a one for one program, then you can start to make positive changes in the world without a significant financial commitment. This option provides a door for SMBs, startups, or even freelancers can begin promoting themselves and the good work that they do every day. Companies can get started on this model by offering as little as $0.01 per business transaction. There are platforms that provide a giving system for businesses with a minimal time investment, such as B1G1, so much of the work can be automated for you.

3. This business model can increase the levels of customer loyalty you experience.
When customers start shopping with a business that uses their funds to help other people in need, then it feels good to be part of something that has a tangible impact on the world. Those folks are planning on buying socks, shoes, backpacks, and all of those other consumable goods they need in the first place. Even if it means they need to spend a little more to get something that helps others, they’re willing to do so if that means someone can find some relief. The American dollar converts well to other currencies, so even a small donation can have a big impact on someone’s life. A simple act, like purchasing a goat that can provide a sustainable income for a family in Haiti, helps to keep those customers coming back for more items.

This advantage provides more forgiveness during the times when the quality of your product or service isn’t up to par. Customers look at the overall good that their purchase can do for others, so they see it more as an investment than a standard purchase.

4. The one for one business model encourages more business loyalty.
The retail market can see high levels of turnover each year. If a company decides to embrace this business model, then it will connect workers to the people they help with their job. This process creates a positive company culture that invites everyone to be part of something that is inspiring. That extra dimension to their work can add a lot of satisfaction to what each person does, creating fewer turnover issues for some companies. Competitive pay must still be part of the employment offer, but some workers are willing to earn a little less if they can start working at a company that they know does good stuff for the rest of the world.

5. It is a format that helps to get you through the bad days.
When you have good days with a business in the one for one format, then you know that your contributions are trickling down to create a meaningful impact on the world. If you’re having a bad day or the profits turn mediocre, there is still comfort in knowing that somewhere there is a person living life a little more comfortably because of what you’re doing every day. That motivation can help you to turn things around for your company because you’re inspired to do something bigger, bolder, or with more creativity.

6. Donations can change the life of a child.
Imagine that a child can’t go to school because they live in an area where hookworms are problematic and sharps frequently stick up from the ground. A pair of shoes could help them walk to classes safely without endangering their health. This boost of confidence that can come from this action can have a long-term positive effect on the individual. These transactions are more beneficial than purchasing a cheap item from China that has no bearing on the rest of the world beyond an improvement in a company’s profit margin.

Critics may point out that the success stories here are few and far between, but the reality of this business format is that it’s only a little more than a decade old. Companies are tweaking their approach to it so that the process makes sense for their needs. Warby Parker teaches entrepreneurs to make eyeglasses in addition to giving them away.

7. This business model can inspire more investments.
Mycoskie found himself visiting Argentina to see that there were dozens of children running around without shoes on. This sight inspired a donation of 10,000 shoes that were useful in the creation of immediate health benefits. Even TOMS Shoes admits that there are changes to their approach that they might make now after 10+ years of donations, but proponents would point out that this idea inspired a movement that encourages other businesses to help people in need. Instead of relying on charities to do all of the work, agencies are investing locally, sourcing products from farmers to create new goods, and then exporting those items to the western world.

That means consumers in Europe, North America, Australia, and other developed countries have a responsibility to look for these items and purchase them if it makes sense. By supporting the economic efforts of others, more jobs begin. That is the ticket that brings more people out of poverty, even if they work in an agricultural profession.

List of the Cons of the One for One Business Model

1. Giving anything away is a bad way to fight poverty.
Even though the one for one business model is climbed into the mainstream consciousness since its introduction in 2006 on a large scale, the efforts are more about pleasing oneself than they are helping other people. TOMS Shoes has given away over 35 million pairs of shoes in 60 countries, but these are just bandages on the needs of these people. It would be more consistent to invest in the infrastructure of developing communities to improve their overall lifestyle instead of giving them a comfortable pair of shoes to help.

Companies should be asking how they can help to create prosperity for the developing world instead of providing a free exchange of goods. TOMS Shoes has even evolved from its initial concepts because of this issue.

2. It shortchanges the economies of the developing world.
If a business decides to manufacture products in a lower-cost labor environment like China, Thailand, or Bangladesh, then the impact of their giving isn’t magnified like many customers think it would be. When a company doesn’t support local manufacturing as a way to create low-cost products for their customers, they are actually perpetuating the very issues of poverty that they say they’re trying to stop in the first place. There must be a purpose to the act of giving for it to make sense.

TOMS Shoes giving canvas-based products to children in areas with heavy rain will cause the product to fall apart quickly. It would make more sense to send manufacturing jobs to these regions to boost their economic profile.

3. Giving people products does not always improve their health.
In the one for one model, most companies give something when a customer purchases an item. Although there are hundreds of businesses that are taking this approach today, their work could take on a more concentrated effort to change public health. Having new glasses won’t do someone any good if the spread of human waste in a village is contributing to the spread of disease. If these firms would invest a small percentage of their giving toward local health programs, then they could be responsible for leading some of the major changes that will help people over time.

4. It is a format that fosters dependency.
If a company floods a developing community with free products, then the businesses in that region which sell something similar have no way to compete. Even though many of these agencies say that they go into an area where people wouldn’t be able to afford what they receive in donations anyway, that defense doesn’t change the fact that the behavior creates a dependency. Some critics even compare this action to a new form of colonialism. Instead of building a more robust business culture, people start depending on free items to make it through their day.

Good intentions are usually part of the foundation of volunteerism and charitable work in most communities. If those efforts aren’t focused on a tangible process that can lift everyone up and out of poverty eventually, then the goal is more about comfort than long-term success.

5. Micro-enterprises struggle to find success with this venture.
A micro-enterprise is a small business typically operating in a developing country. It can also be a part-time freelancer in the gig economy or someone who may run a business that doesn’t make a profit or credible disruption in the marketplace. One for one models are a form of marketing to the customer that requires a targeted demographic that is listening to the brand’s messaging. The best products and services in the world don’t sell if no one knows about them, which is why this disadvantage applies. You must have some type of platform available to you in order for this option to work.

6. If the company stops donating, then the benefits disappear.
This disadvantage comes back to the issue of dependence. If a company decides to help one community over another, then the benefits of such a donation are limited. It can even create resentment in a culture when one village receives help over another. Businesses can struggle with the one for one model when they are seen as being in a place where they can act like God in how they distribute resources. This struggle can have long-term implications for their reputation as well.

Conclusion

The one for one business model does have a lot of potential that is worth considering. It capitalizes on a person’s desire to do something for the social or environmental good while meeting their everyday needs. The companies that incorporate this method can shine a light on numerous endemic social issues so that real change can occur.

When looking at the pros and cons of the one for one business model, it is necessary for each agency to implement a process that attacks the root issues that hold the developing world back from a modern definition of success. Far too often, a lack of insight on the underlying issues tends to give people little help while it strokes the ego of the wealthy because it feels like they’re doing something.

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