In 2006, Blake Mycoskie revolutionized the marketing game by starting a movement called “One for One”. The idea behind this campaign is that for every pair of shoes purchased, Toms Shoes will provide a free pair to someone in need.
On the surface, this initiative benefits everyone: Toms increases their sales, as customers buy into the idea of helping the less fortunate while also getting a new pair of shoes. As for the recipients of the free shoes, they are grateful for this unexpected contribution.
However, what happens to small businesses?
Seemingly forgotten in this equation, they are unable to compete with Toms providing the same product for free. Consequently, these businesses are forced to close, as they are not gaining enough profit. This is why the One for One business model is detrimental to the economy. The campaign may have originated with good intentions, but the downsides of the model were not accounted for prior to initiation. This is simply a quick fix for the much larger issue of poverty. However, it has the opposite effect: it is not fixing the issue of poverty, but adding to it by creating a dependency on charity.
In order to truly help, developing countries need more opportunities and not free handouts.
Sources:
HBR: How Social Entrepreneurs Make Change Happen
What is Social Entrepreneurship?