"I'm a big believer"— Shark Tank's Kevin O'Leary on direct-to-consumer and social mission

Kevin O'Leary, the prominent Shark Tank investor and businessman, has become a strong advocate for direct-to-consumer (DTC) models, emphasizing their significance beyond just profitability. At a conference at Miami University in October 2024, he shared that the shift towards DTC and its associated data collection and customer relationships are crucial for long-term business success.

"I'm a big believer in social mission beside profitability," O'Leary said.

He was one of the featured speakers for the Farmer School of Business Anderson Distinguished Lecture Series. O'Leary highlighted that while profits are essential for business viability, integrating social causes into business models has become a significant driver of consumer engagement and brand loyalty.

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Shark Tank's Kevin O'Leary on importance of DTC models and social missions in modern business

The pandemic's role in shaping business models

Kevin O'Leary stated that the COVID-19 pandemic hastened the adoption of DTC models, prompting most businesses to rethink how they marketed and sold their products. He pointed out that even big companies such as Nike adopted DTC models, and Nike's DTC sales increased from 26% to 50% during the pandemic.

The direct relationship between companies and consumers created opportunities for businesses to access detailed consumer data, which O'Leary described as “the magic.” He highlighted how this data—such as product preferences, purchasing habits, and demographic information—provided businesses with insights they had never had before.

“When you order products and services directly from a company, you form a relationship. They know who you are, you know who they are, but there's something else, and this is the magic — You get the data," O'Leary explained.

This data not only helped businesses understand their customers better but also significantly boosted their profit margins, sometimes increasing from 50 cents to 82 cents per dollar. The shift to DTC allowed businesses to operate more efficiently, with reduced overhead costs.

“There wasn't any middleman anymore. You're making your product and shipping it right to the customer...Margins exploded because direct to consumer models also exploded.” the Shark Tank fame added.

O'Leary observed that during the pandemic, many new businesses were started by entrepreneurs who adapted quickly to the online environment. He pointed out that this change created “100 million new customers” who turned to digital platforms to meet their needs, saying,

"100 million new customers were born online in nine months, an extraordinary change."

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Kevin O'Leary on social mission and consumer engagement

Shark Tank's Kevin O'Leary visits "Mornings With Maria" (Image via Getty)

Moreover, O'Leary emphasized the growing importance of integrating social missions into business models. He cited the example of a sock company featured on Shark Tank, which used a charitable mission—donating socks to homeless people—as a way to attract and engage customers.

O'Leary noted that this social mission motivated customers to choose the company’s products over other brands. It demonstrated how a strong social cause can help differentiate a business in a competitive market.

"That really motivated buyers and the base and individual consumers to buy those socks over the other 90 different brands," O'Leary said.

O'Leary stated that businesses can no longer succeed solely by focusing on profit. Combining a social mission with this model can fortify customers' loyalty and support toward it. According to Kevin O'Leary, there are two things a company should consider when doing business: bottom-line focus and how to impact society positively.

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