One more letter in BT issue dated 21st June 2015
My response to TOMS Shoes Case Study
What can we learn from this case study?
1. My personal experience:
I recently purchased a pair of size 8 black leather rubber-soled chappals for my daily use from the nearby local market for Rs.900/- after haggling for a 10 % discount on a MRP of Rs.1000/-. The Engineer in me tried to work out the average maximum selling price for such a chappal and it came around to Rs. 450/- or so.
2. My personal view:
From the above experience, it was amply clear that the sellers were selling it for almost double the price. Hence TOMS’ much touted strategy “One For One” is not a losing proposition at all since the company is still making some profit. So when TOMS sells a pair of shoes, it can afford giving a new pair of shoes to an impoverished child, and when TOMS sells a pair of eyewear, it can still afford using a part of the profit to save or restore the eyesight for people in developing countries. All said and done, Blake Mycoskie’s company has deservedly won many awards.Kudos!
3. What I missed:
BTW, the study somehow missed touching the reason behind the name of the company. The company name TOMS has knowledgably been derived from the word “tomorrow,” and has evolved from the original concept, “Shoes for Tomorrow Project.” So much for the company’s enlightened vision!
4. What others feel:
One well known writer Daniel H. Pink has described the company’s business model as “expressly built for purpose maximization”, whereby TOMS is both selling shoes and selling its ideal and thereby creating consumers who not only purchase shoes but also make a purchase that transforms them into benefactors! Out-of-the-box thinking indeed!
5. Why others do not emulate TOMS:
It is said that TOMS’ ‘One for One’ model has inspired many different companies to adopt similar concepts. The company’s strategies and action-oriented efforts for philanthropy and CSR initiatives are indeed laudable but it makes one certainly wonder why shoe companies in India like BATA, LIBERTY, RELAXO and CARONA etc do not follow TOMS’ footsteps!
6. On facing criticism:
TOMS has received criticism from the International Development community who have charged that TOMS’ model is designed to make consumers feel good rather than address underlying causes of poverty. Criticisms have also included whether or not the shoe donation is as effective as a monetary one to other charities. TOMS’ founder Blake Mycoskie had responded to these criticisms in November 2013, saying “If you really are serious about poverty alleviation, then you need to create jobs. At first I took that personally, but then I realized that they were right! Using our model to create more jobs is the next level.” The company has announced its plans to have one-third of all its shoes produced in countries receiving aid by 2015. Superb response to the critics!
6. On marketing strategies:
TOMS’ marketing has involved fashion shows, high- profile events, university-campus marketing, social media, and even temporary pop-up stores. All opportunities for advertising have been used to the hilt!
7.On environmental issues:
It is learnt that TOMS’ products have been reportedly created to fit with different environmental ideals as well, including the creation of shoes that adhere to “vegan” product restrictions in their product lines. Yes even environmentalists have been kept happy indeed!
8. Facts speak for themselves:
It is reported that as of 2012, TOMS has given away over one million pairs of shoes in 40 countries. Wow! Take a bow!
J S Broca, B TECH MECH; PGDBM;Retired Chief Manager,
Bank Of India, New Delhi
My letter in BUSINESS TODAY ISSUE DATED JUNE 21 2015 ON START-UPS
This refers to your case study on TOMS shoes (A Shoe for a Shoe, and a Smile, June 7). From my experience, it is amply clear that a company normally sells it for almost double the price. Hence, TOMS’s “one for one” strategy is not a losing proposition at all since the company is still making some profit. So when TOMS sells a pair of shoes, it can afford to give a new pair of shoes to an impoverished child, and when TOMS sells a pair of eyewear, it can still afford using a part of the profit to save or restore the eyesight for people in the developing countries. It is reported that as of 2012, TOMS has given away over one million pairs of shoes in 40 countries. All said and done, Blake Mycoskie’s company has deservedly won many awards. Kudos!
– J.S. Broca, New Delhi