yes they can but you need to collect multiple toys of their pre-evolution. for example i think to evolve a oshawott into a dewott you have to collect seven oshawott and trade them in.
EdIT:the process: collect 7 of the same pokemon and releses them at the same time at the same release point to get the next level in the evolutionary chain. release 49 of the same pokemon to get the final level.
(from TheUltimateShyGuy)