A Realist Analysis of TOMS Shoes: Retail Hypocrisy & Charitable Giving

First off, I’d like to say that I’m not a conspiracy theorist. I’m a student of political science and reality. Recently, I have been hearing a lot (and I mean a lot!) about TOMS shoes. I am sure you have too. If you haven’t, then more than likely you have been living under a rock somewhere. That’s okay! I’ll give you the breakdown. TOMS is a shoe company whose motto is “One for One”. What that means is that for every pair of shoes you purchase, another pair is given to a child in need somewhere across the globe. That is a virtuous business ideal. Isn’t it? When I logged on to TOMS website today I watched a promotional video that mentioned that the company’s CEO, Blake Mycoskie (sp?) was about “placing others before himself”. Now, that sounds like one heck of person.

After this, I thought that I myself might invest into a pair of these shoes. I suppose that I am not anymore fad-proof than anyone else. Several of my friends have these shoes and claim to enjoy them. However, upon examination there really isn’t much to them. The general shoe is practically monastic. They consist of canvas and a rubber sole. That’s it. Okay, so they are not Lucchese cowboy boots made out of Nile crocodile (which are beautiful, by the way). I expect the price for these shoes to be something like $19.95. I was rather surprised to find that the price for the most basic pair starts at $44. More desirable TOMS go for $69 on their website. What really made me laugh was the fact that there was a burlap (I kid you not) pair of men’s TOMS that they were marketing for $54. Burlap! That’s what they make potato sacks out of and then throw away! Perhaps, my Scottish frugality is coming through here, but my inner penny-pincher thinks that something is awry.

I would like to preface this with a note that I do understand that the company is in existence to make money. I’m a good capitalist like (most) everybody else. However, from an economic perspective the notion that the company is about placing others before oneself doesn’t hold the least bit of water. Upon close examination of these shoes I would suggest that the cost of production is about $5. That’s really how basic the materials and construction are. So, if you buy the minimalist TOMS shoe you are paying $44 and the company has a $34 profit margin (remember they are giving another $5 to a child in need). Oh but wait! I know what you are going to say, “What about shipping costs?”. I went to the United States Post Office’s website and did a little research. If I personally was going to ship a small flat rate box to South Africa it would cost me $13.45. This box has a maximum cargo capacity of about 4 lbs, so I am going to assume that you could at least fit three pair of children’s shoes into it. This would mean that the shipping cost would be $4.48 per pair. Now remember, this is the shipping cost for a single small box by an individual. Undoubtedly, the TOMS Corporation gets a much better rate than I would. If we include shipping, the adjusted profit margin is $29.52 per pair of shoes. That’s a lot of money. It is also important to note that this is their most basic shoe. More expensive models, such as the burlap would have an increased profit margin. The profit margin for the potato sack shoe, err, burlap shoe, would be $39.52. Now, according to TOMS website they donated over 400,000 shoes through their “One for One” system. That amounts to a minimum of $11, 808,000 in revenue at a profit margin of $29.52 per pair. Pardon me if I don’t necessarily believe that the company’s intention is to place others before themselves anymore.

For kicks and giggles I did a little comparative shopping online and found that the retailer Boscor’s had a shoe that was practically the brother to those marketed on the TOMS website. The cost of this particular shoe was $9.99. They even came in denim for the same price, which would cost you $54 if it had a TOMS tag on it. I am certain at this point many of you are pretty heated at me right now and are yelling “SO WHAT!?” at your computer screen. Certainly, giving something charitably is better than giving nothing. TOMS makes that easy for you. However, from a realistic perspective, if you are truly interested in doing good, and not just fitting in with the crowd, it would make tons more sense for you to pay $9.99 for the non-designer “gathered closed back canvas” shoe at Boscor’s and then give the $44.01 that you would have saved (assuming you went for the trendy denim shoe) to the charity of your choice. Let me emphasize the fact that charitable giving is one of the most rewarding things a person can do, and I am glad that TOMS is giving away shoes to children in need. That is stupendous! HOWEVER, marketing yourself as some selfless entity that only seeks altruistic perfection and then reaping a $39.52 profit margin is utter hypocrisy. So, do yourself (and the world) a favor and do a bit of research before you invest in that next pair of TOMS, okay?