(Photo: greenqueen.com)

The shoe company built on a one-to-one donation model

Toms was one of the most successful shoe brands thanks to its one-for-one donation model, transforming a purchase into an act of charity. By 2013 Toms was reportedly making $250 million in sales a year since their humble beginnings in 2006 and donated 10 million pairs of shoes. By 2014, Toms was valued at $625 million.

Entrepreneur, Blake Mycoskie, started the company in 2006 with the goal of giving back. The original company name was supposed to be Shoes for Tomorrow, then shortened to Tomorrow Shoes, and eventually stuck with Toms.

Mycoskie was on season 2 of “The Amazing Race” on a trip to Argentina, he saw kids without shoes and wanted to do something to help. While in Argentina a certain shoe design caught his eye, the alpargata, which inspired Toms comfortable and affordable design which is an everyday casual shoe for the people of Argentina.

A local shoemaker helped to make an updated version of the alpargatas for Toms with the mission to make shoes for the buy one, give one model. In the beginning, there was a huge demand for Toms with a lot of media attention with the celebrity-effect.

Toms was one of the first companies to adopt the buy one, donate one model that made the brand more appealing with a social responsibility angle. The Toms logo was instantly recognized for their charity work with customers willing to spend $48 to $78 for a pair.

Toms success started to decline with their dependency on only offering their one design and became stale including the easy design for other competing brands to replicate also selling them for a lower price.

Sketchers made their own version of the alpargatas style with their Bobs collection that donates two pairs of shoes for every pair sold, offering a better price and a bigger donation to charity.

Toms has worked to expand its product line to include coffee, backpacks, and sunglasses but have yet to be seen beyond the original canvas shoe. With other brands copying Toms donation model, they’ve lost their unique identity as being the only shoemaker to offer this service.

Eventually, people started questioning whether Toms was actually donating shoes that are promised in their charity model. In 2010, the University of San Francisco conducted research on the impact of Toms donation program.

The research concluded that Toms donation program wasn’t actually that significant. Toms stated that they use their donation program to reward kids with good school attendance with free shoes so kids feel like they earned them for their hard work. Toms also said that they’re working on their shoe design to make them last longer.

Eventually, sales started to significantly drop due to the company relying on wholesale retailers when they should be focusing on direct to customer sales that have more long-term advantages. One of the biggest advantages is that the company can control profit margins with declining sales in 2019.

Toms had a $300 million loan due this year and credit-rating agencies expect Toms won’t be able to pay up. In 2019, a group of Toms creditors officially took over the company in exchange for debt relief with Toms stating creditors will be investing $35 million into the company.