The Social Enterprise Review is a collection of op-eds written by students at Northeastern University regarding contemporary issues in the world of social enterprise. The Review is managed by Northeastern University’s Social Enterprise Institute.
April 9, 2013, by Rebecca Darling. Original article.
In response to increasing criticism of traditional aid systems, the buy-one-give-one social business model was born. Buy-one-give-one, also known as BOGO, promises consumers that for every product purchased, a subsequent product will be distributed to a person in need. The ease and feel-good nature of the one-for-one model, combined with consumers’ response and participation, has skyrocketed BOGO’s presence in the world of social enterprise. Unfortunately, like many social businesses, good intentions are not always enough to create meaningful and long-lasting social impact. With the popularity of the BOGO model it would seem logical for the method to be effective, however the examples of unsuccessful buy-one-give-one enterprises seem to be as prevalent as the successes. This being said, is it possible for social businesses to effectively use the one-for-one model to create lasting social impact, as opposed to simply banking on the masses uninformed consumers?
It is difficult to discuss the one-for-one model without acknowledging its originator, TOMS Shoes. Blake Mycoskie launched the company in 2006 after a trip to Argentina where he witnessed the hardships poor children face without proper footwear. In an honest attempt to solve this problem, TOMS Shoes successfully plays on the emotions of wealthy consumers in order to sell cost inefficient footwear, with the promise of donating the same pair of poor quality shoes to someone in need. However, in addition to supplying poor quality shoes, TOMS Shoes are given away and therefore undercut local markets, hurting businesses and fostering an unsustainable aid-based economy. Blake Mycoskie enters communities, uninvited and uninformed, to implement short-term fixes to a system in need of long-term solutions.
It is important to credit Mycoskie for the introduction of this innovative business model to the social impact community. While its founder failed to do so, the buy-one-give-one business model has the potential to be used to create meaningful social impact. Since its inception, numerous businesses have adopted and improved the model to better support poor communities.
One Million Lights
Over 1.6 billion people lack access to electricity. In many developing countries, the only alternative to electricity is dangerous kerosene lamps. Not only is kerosene expensive, and associated with hazardous health effects, but the light produced is often not bright enough to read the words on a page. One Million Lights is a nonprofit organization that hopes to remedy this problem with the production of solar powered LED lights.
One Million Lights uses the BOGO model, in addition to monetary donations, to give lamps to families at the base of the economic pyramid. These lamps not only improve health conditions as compared to open flames, but can also increase the length of the school day in order to improve educational prospects for children. As opposed to many other products that use the BOGO model, solar light is not essential to daily life and therefore it will be more difficult for One Million Lights to maintain long-term sustainability.
One way in which the company can increase sustainability is by selling the product to their customers, as opposed to giving them away for free. By selling these lamps on a tiered pricing scale, the customers would be more likely to value the product and the impact that it will have on their family.
A successful buy-one-give-one model is reliant on the ability of a product to sell well in the overall market of consumer products, as a means of maximizing social impact. A socially minded product sells well in traditional markets, by having a competitive advantage over the standard market options. Warby Parker achieves this by marketing quality glasses at a price point far below the average cost of eyewear. In this way Warby Parker is able to increase sales without relying on the BOGO model as their sole selling point.
Warby Parker uses the BOGO model as their means to social impact, however their organization is sustainable due to a variety of other metrics. In addition to the affordable price, the business has virtually revolutionized the process of purchasing glasses through virtual try-ons and free home try-ons. These innovations have caused Warby Parker’s giving model to take secondary role in the marketing of their brand, which further increases the sustainability of the organization as a whole.
Impact Measurement and Sustainability
It is crucial that any social business measure and evaluate their impact in order to grow and improve. This is especially true for businesses that are giving away their products and services for free, as these organizaitons must ensure that they are targetting the populations most in need of their particular product. We have seen the consequences of uninformed organizations, such as TOMS Shoes, whose lack of research of the problem and the effected communities has led to serious repercussions.
Although the BOGO model, by design, is a sustainable means to delivering a product, there are always ways in which an organization can improve their sustainability. Organizations such as One Million Lights could benefit from the implementation of a pricing gradient for their products. This would mean that a customer would be charged based on their ability to pay. In addition to supplying some sort of revenue to the company, sliding scale pricing would give the customers a sense of ownership and value in the product.
In addition to paying a small fee for the product, operational sustainability can be achieved by moving the production of the product to the communities that the product is meant to impact. Moving production of TOMS Shoes to an underdeveloped community would serve to stimulate the economy and provide jobs to the families that live there. This, in turn, would supplement the familial income so that children can stay in school longer and improve their lives. This type of manufacturing not only reinforces the mission of a socially- minded company, but also increases financial sustainability.
The Future of BOGO
The buy-one-give-one business model will certainly have a strong future in the sector of social enterprise. As entrepreneurs continue to innovate in this space, there are many ways in which the one-for-one model can be improved and expanded upon. Simply giving a product or service away can create a community of dependence that is not beneficial for the organization or the community in which the organization is operating. For example, in the case of TOMS Shoes and One Million Lights, a scaled pricing system would help to ensure that the customer values the product, as well as increase the financial sustainability of the organization. In addition, if One Million Lights, for example, gave their lights to a woman to sell, she could market them at a reasonable price for her community. This could help to lift the woman and her family out of poverty, as well as create a sense of pride and ownership for those who spent their hard earned money on the purchase of a lamp. These community-based projects are more sustainable than international handouts because the community takes on the responsibility of ensuring the business’ success.
The popularity of the BOGO business model is not without reason. An extremely effective marketing tool, when properly executed, it is possible to use this tool to create meaningful and lasting social impact. Many social businesses have not properly executed this tool and in turn have operated a feel-good business for western consumers, rather than a life changing operation for the poor. Many one-for-one models fail to accurately assess the needs of the poor and effectively administer their product to the target communities. It is crucial that future social businesses look at the bigger picture, and the lasting effects the outside involvement can have on a community. Sustainable development is not about giving a gift, but rather about creating long-lasting change. This reinforces the concept that social enterprises must strive to obtain a social impact, as opposed to working to help the poor for personal fulfillment. When used correctly, the buy-one-give-one model can have sustainable social impact, as opposed to merely being used as a profit-gaining marketing campaign.