The strategy was popularized by TOMS Shoes in 2006, with the shoe company donating a new pair of shoes to a child in a developing country for every pair of shoes sold to a consumer. The one-for-one business model is based on the idea that for every consumer purchase, an equivalent or similar product is given away to someone in need.
- Understanding the one-for-one business model
- Other examples of the one-for-one business model
- Key considerations of one-for-one business model
- Key takeaways:
- Connected Business Model Types
Understanding the one-for-one business model
Opinions on the one-for-one business model are divided. Proponents suggest it is one way to create more social and commercial value in society, while the most fervent critics claim it is a marketing tactic that exploits the poorest individuals.
Other examples of the one-for-one business model
After witnessing the success of TOMS shoes, the model was implemented by many other businesses. These include:
Under the Buy a Pair, Give a Pair program, Warby Parker distributes glasses around the world to help people with impaired vision.
This Bar Saves Lives
This company aims to fight global hunger by donating a packet of life-saving food with every purchase of a healthy gourmet bar.
The Little Bee Co.
With every diaper purchase, the Little Bee Co. donates a cloth diaper to an orphan in need.
Better World Books
This company is on a mission to improve literacy rates in developing countries. With every book sold under the Book for Book initiative, a book is donated to one of the company’s two partners: Books for Africa and Feed the Children.
The one-for-one business model also works in the medical field. FIGS is a provider of comfortable and practical medical wear and donates a clean set of scrubs to healthcare providers who lack the proper attire to do their jobs safely.
Key considerations of one-for-one business model
Entrepreneurs considering the one-for-one business model should note the following key considerations of the approach:
1 – It can boost marketing efforts
With 75% of consumers likely to purchase from a company that supports an issue they agree with, it is imperative marketing and product development teams enable the consumer to get what they want and make a positive impact on society at the same time.
2 – It must leverage economies of scale
In some respects, the one-for-one business model is a balancing act between social good and profitability. In other words, the business must not devote too many resources to producing the donated item.
TOMS made the model work for a time because it utilized cheaper materials and economies of scale through high production volume. But after donating 95 million pairs of shoes in 2019, the company almost went bankrupt and was forced to distance itself from the strategy.
Premium products with lower demand may not be a suitable fit for the one-for-one approach, with some companies choosing to donate a percentage of their total sales to a particular cause. TOMS now donates 33% of its profits to grassroots efforts building local communities from the ground up.
3 – It must consider the recipients
Critics argue that when a company donates items to citizens en masse, they can become dependent on donations instead of contributing to a stronger local business culture or improving their living standards.
While there is nothing inherently wrong with good intentions, one-for-one initiatives should be designed to help people lift themselves out of poverty. Socially responsible companies must also be careful not to undercut the local sellers or producers of the goods they intend to donate.
- The one-for-one business model is based on the idea that for every consumer purchase, an equivalent or similar product is given away to someone in need.
- The one-for-one business model has been used successfully by companies such as Warby Parker, This Bar Saves Lives, Better World Books, FIGS, and The Little Bee Co. Donated items include books, diapers, medical scrubs, and essential food packets.
- There are a few key considerations of the one-for-one model. For one, it can enable the business to profit from the next generation of socially responsible consumers. However, the strategy will only work if the business utilizes economies of scale and considers the impact donated items have on the recipient and local producers.
Read Next: TOMS Shoes Business Model
Connected Business Model Types
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