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
The one-for-one model, otherwise known as “buy-one give-one”, is a social entrepreneurship business model in which one item is donated for each item purchased.
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:
Warby Parker
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.
FIGS
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
The one-for-one-business model is an entire marketing strategy in itself. The next generation of consumers is increasingly choosing to do business with companies that give back to the world.
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.
Value Proposition of the One-for-One Business Model:
- Social Impact: The one-for-one business model provides consumers with a sense of purpose and contribution to a social cause. For every purchase made, an equivalent or similar product is given to someone in need, creating a direct positive impact on society.
- Alignment with Consumer Values: This model resonates with socially conscious consumers who prioritize businesses that support charitable initiatives and address global issues.
- Marketing Strategy: The one-for-one model serves as a powerful marketing strategy, attracting customers who want to make a difference through their purchases. It can enhance a company’s brand image and reputation.
- Customer Engagement: Businesses implementing this model often engage customers in their mission, fostering a sense of community and shared purpose.
- Choice and Impact: Consumers have the freedom to choose products they need while simultaneously contributing to a social cause, aligning personal preferences with philanthropy.
Distribution Channels of the One-for-One Business Model:
- Online and Physical Stores: One-for-one businesses utilize their online and physical stores to sell products to consumers. These stores often serve as the primary distribution channels, where customers can make purchases.
- E-commerce Platforms: Many one-for-one businesses leverage e-commerce platforms like their official websites or online marketplaces to reach a wider audience and facilitate online sales.
- Retail Partnerships: Collaborations with retail partners allow one-for-one companies to expand their distribution network and make their products available in various physical stores.
- Social Media and Online Marketing: These businesses use social media platforms and online marketing campaigns to promote their products, mission, and the impact of one-for-one purchases, attracting socially conscious consumers.
- Community Engagement: Engaging with local communities through events, partnerships, and outreach programs can further promote the one-for-one model and generate sales.
- Cause-Based Events: Hosting or participating in events related to the social cause they support can increase brand visibility and product sales while reinforcing the mission.
- Corporate Partnerships: Collaborations with other businesses, especially those aligned with similar values and missions, can open up new distribution channels and customer segments.
Key takeaways:
- 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.
Key Highlights
- Understanding the One-for-One Business Model: The one-for-one business model, also known as “buy-one give-one,” is a social entrepreneurship approach where a company donates one item to someone in need for each item sold to a consumer. It is based on the idea of creating both social and commercial value in society.
- Examples of the One-for-One Business Model:
- TOMS Shoes: Donates a pair of shoes to a child in a developing country for each pair sold.
- Warby Parker: Distributes glasses to people with impaired vision for every pair of glasses purchased.
- This Bar Saves Lives: Donates a packet of life-saving food for every purchase of a healthy gourmet bar.
- The Little Bee Co.: Donates a cloth diaper to an orphan in need for every diaper purchased.
- Better World Books: Donates a book to improve literacy rates in developing countries for every book sold.
- FIGS: Donates a clean set of scrubs to healthcare providers in need for each purchase of medical wear.
- Key Considerations of the One-for-One Business Model:
- Marketing Efforts: The model can boost marketing efforts as consumers prefer to support companies that give back to society.
- Economies of Scale: Balancing social good and profitability is crucial, as the company must not allocate too many resources to producing the donated item. Utilizing economies of scale is essential for success.
- Recipient Consideration: Companies must consider the recipients of the donations to avoid dependency and focus on empowering individuals to lift themselves out of poverty. They should also avoid undermining local sellers or producers.
Element | Description |
---|---|
Value Proposition | A One-for-One business model offers the following value propositions for its customers: – Social Impact: The brand’s products or services contribute to a social or environmental cause. – Consumer Engagement: Customers are actively involved in making a positive impact through their purchases. – Quality Products: Offering high-quality products while simultaneously making a difference. – Awareness: Raising awareness about important social or environmental issues. – Choice: Allowing customers to support a cause of their choice through their purchases. – Transparency: Ensuring transparency about the impact of each purchase. |
Core Products/Services | Core products and services provided by One-for-One businesses include: – Products for a Cause: Selling products where a portion of the purchase price goes toward a charitable cause. – Services with Social Impact: Offering services that directly benefit a social or environmental cause. – Donation Matching: Matching customer purchases with donations to charitable organizations. – Impact Reporting: Providing reports or updates on the impact of each purchase. – Consumer Education: Educating customers about the cause and the impact of their support. – Partnerships: Collaborating with charitable organizations to maximize impact. |
Customer Segments | One-for-One businesses target various customer segments: – Socially Conscious Consumers: Individuals who prioritize making a positive impact through their purchases. – Millennials and Gen Z: Younger generations with a strong interest in socially responsible brands. – Nonprofits and NGOs: Charitable organizations seeking partnerships for fundraising. – Businesses: Companies looking to incorporate social impact into their corporate social responsibility (CSR) initiatives. – Awareness Seekers: Customers interested in learning more about social and environmental issues. – Philanthropic Organizations: Foundations and philanthropic institutions supporting social causes. |
Revenue Streams | One-for-One businesses generate revenue through various revenue streams: – Product Sales: Revenue comes from selling products with a portion of proceeds designated for a charitable cause. – Service Fees: Earnings from providing services that directly benefit a cause. – Donation Matching: Revenue generated by matching customer purchases with donations. – Impact Reporting Services: Fees charged for providing impact reports to customers. – Corporate Partnerships: Earnings from partnering with businesses and nonprofits. – Grant Funding: Obtaining grants from foundations or government agencies for social initiatives. |
Distribution Strategy | The distribution strategy for One-for-One businesses often involves partnerships and storytelling: – Online and Retail Sales: Offering products or services both online and through physical retail locations. – Charitable Partnerships: Collaborating with charitable organizations to identify and support causes. – Marketing and Storytelling: Using marketing and storytelling to highlight the brand’s impact and mission. – Consumer Engagement: Engaging customers through social media and community events. – Corporate Collaborations: Partnering with other businesses for joint initiatives. – Educational Content: Providing educational content about the cause and its significance. – Transparency: Ensuring transparency in how contributions are utilized for maximum impact. |
Read Next: TOMS Shoes Business Model
Connected Business Model Types And Frameworks
Attention Merchant Business Model
Main Free Guides: