Toms Shoes Business Model

Jan 23, 2024

The Toms Shoes Business model is one-for-one. The one-for-one business model means the company donates one pair of shoes to someone in need for every pair of shoes it sells. This unique business model was invented by Blake Mycoskie, the founder of the company, after he saw some children in Argentina who had no shoes. While this business model appears basic, it has some advantages over regular business models. The major advantage of the one-for-one model is its ability to trigger customers to market Toms Shoes’ products via word of mouth and social media.

The business model combines positive social impact with profitability. The company uses about $10 to produce a pair of shoes and sells them at $40 to $140 in stores. The difference between the production cost and selling price clearly shows that the company still makes a reasonable profit after donating a pair of shoes for every pair it sells. So far, the company has donated 35 million pairs of shoes to children in 70 countries, including Argentina, the U.S., South Africa, Ethiopia, and Rwanda.

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Blake Mycoskie, an American entrepreneur, founded Toms Shoes in 2006. Mycoskie got the idea to establish Toms Shoes when he traveled to Argentina in 2006 and realized that some children didn't have shoes. The first Toms Shoes design was alpargata. This design is popular in Argentina, and it is simply a canvas slip-on rubber sole. At first, the company focused on donating free shoes to children in Argentina for every sale it made. Eventually, the company started expanding the regions to which it donated free shoes. The company sold 10,000 pairs of shoes in the first year of establishment. As a result, it donated 10,000 pairs of shoes to children in Argentina in October 2006. In 2007, Toms Shoes launched an annual event known as "One Day Without Shoes" to raise awareness about how shoes affect children's lives.

In 2011, the company expanded its product portfolio by introducing eyewear. The one-for-one model still exists in other products the company sells, though the principle is slightly different. Toms Shoes company uses part of the profit it makes from eyewear sales to restore sight to someone in developing countries. Thus far, the company has successfully restored sight to over 275,000 people. The company's product portfolio has expanded even further now as the company currently sells other products like coffee, bags, and other accessories.

The Toms Shoes company is jointly owned by Blake Mycoskie and Bain Capital. Blake Mycoskie used to be the sole owner of the company until 2014, when a private investment firm known as Bain Capital bought 50% equity stake in Tom Shoes company. Mycoskie believes that his company needed Bain Capital as a partner to hasten the growth of the Toms Shoes company.

Toms Shoes’ mission statement is, "For every pair of Toms shoes purchased online or at retail, the company will provide a pair to a child in need. One for One."

Toms Shoes manufactures and sells shoes, eyewear, bags, and other accessories. Toms Shoes engage in varieties of operations, including the following:

Toms Shoes designs and manufactures varieties of footwear for all categories of people. Classic canvas shoes are the most common design the company manufactures. A few other types of shoes the company manufacture are sandals, boots, and wedges. The company focuses on comfort and style while making shoes.

Toms Shoes company operates retail stores in various major cities worldwide. The stores usually display information about the beneficiary of the company's shoe donation to further encourage its customers to support the company's social impact efforts. Also, the company operates an online store like the physical stores.

The company works jointly with lots of charity organizations to distribute shoes freely to children who need them. The company has partnered with more than 100 organizations so that its products can reach people who need them the most.

Toms Shoes is a for-profit company despite its numerous philanthropic activities. The company generates through the following:

Toms Shoes sells its products through its retail stores and online store. The direct sales method allows the company to have control over the price of its products. Also, it allows the company to build a relationship with its customers. The majority of Toms Shoes’ revenue comes from direct sales.

Toms Shoes company sometimes partners with other companies to produce limited edition products. Such a partnership allows Toms Shoes to generate money from a new line of products. In addition, the partnership sometimes helps Toms Shoes reduce the money they spend on marketing and distribution. For instance, there won't be much need to create a new distribution network when Toms Shoes partner with a company that has a well-established distribution network.

Let's take a look at the Toms Shoes’ Business Model Canvas below:

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Toms Shoes’ customer segments consist of:

Toms Shoes’ business is based on the following value propositions. For both its customer segments, they are:

Toms Shoes’ channels consist of:

Toms Shoes’ revenue streams consist of:

Toms Shoes’ key resources consist of:

Toms Shoes’ key activities consist of:

Toms Shoes’ key partners consist of:

Toms Shoes’ cost structure consists of:

Below, there is a detailed SWOT analysis of Toms Shoes:

Toms Shoes business model resonates well with many fashion consumers around the world. The company's unique model demonstrates that it is possible to make high profits while making positive social impacts. Clearly, the one-for-one business model has helped Toms Shoes company to succeed beyond the level most people thought was possible for a company that emphasizes charity.

However, it's important to note that the one-for-one business model has high implementation costs. The company needs to adopt additional models rather than just one business model, which seems unsustainable in the long run.