Written By: Stewart Cao
For the past few years, TOMS faced serious criticism facing their “buy one, give one” business model. TOMS, “a mission with a company”, undermines its own business motto as critics point out the company’s flaws in the BOGO model as it does not provide any results to the issue at hand and actually hurts the local economy instead.
What is TOMS trying to accomplish? TOMS wants to “advance health, education and economic opportunity for children and their communities around the world”. In order to accomplish this, TOMS provides footwear to developing countries, so that children can walk to school despite rough terrain. However, critics believe that there are better investments like investing in infrastructure rather than shoes or even donating their money to a local organization that helps the community. In fact, there has been no statistic proof that TOMS shoes have directly benefited local education by donating shoes. So with that in mind, how is TOMS helping these communities?
Another criticism TOMS received was that they were actually harming the community they are giving shoes to rather than helping it. The main belief behind this is that local shoemakers are losing their business, and locals cannot find work as TOMS outsourced their shoe production in other countries. By outsourcing their jobs, there is no economic growth in the community TOMS donates to, just deterioration. Not only does donating shoes lower employment, but it also reduces productivity in the community. A study done by Frazer states that “used-clothing imports are found to have a negative impact on apparel production in Africa”. This entails a 40% decline in production and 50% decline in employment. Donations in the form of both clothing and even food, has shown to reduce productivity in their economy since local producers have no need to produce those goods.
With these criticisms in mind, is TOMS really helping these developing countries? Despite these criticisms, TOMS should be considered a socially responsible corporation because they source organic goods, and they go beyond what is expected of them in terms of donating goods to communities. In recent years, TOMS actually took these criticisms and developed countermeasures to these problems. First, they began sourcing their jobs in the communities they donate to. Now, 1/3 of their production comes from these countries. Secondly, they started a new business that donates clean water to the community. “By supporting the creation of sustainable water systems, [TOMS] are able to help provide entire communities with access to safe water, which leads to improved health, increased economic productivity, job creation and access to education.” On top of these reasons, TOMS started a movement that other companies like Sketches have adopted. Companies are viewing being socially responsible as a form of cause marketing that could ultimately increase business’s bottom line. Although TOMS could have had a better solution to address poverty in developing countries, they are trailblazing down a path that increases global awareness of communities that do not have access to necessities like clothing and water.