Marc Lore, a serial entrepreneur who sold his startup Jet.com to Walmart for $ 3 billion and then oversaw the transformation of the retail giant’s e-commerce business for the past four years, is leaving his full-time position at company at the end of the month, he told Recode.
His next big business move will be a long way from his current experience: a multi-decade project to build “a city of the future” supported by “a reformed version of capitalism”.
“It is a new model of society that we will be testing”, he joked.
Lore declined to offer further details, but said he would be prepared to reveal additional information in the coming months. Some who have heard of the project say that one of the focuses will be to give ordinary citizens direct economic advantages in the growth of the city.
“Imagine a city with the vibrancy, diversity and culture of New York City combined with Tokyo’s efficiency, security and innovation and Sweden’s sustainability, governance and social services,” says the project’s vision statement. “This will be our New City.”
“This will be a project for life,” he added. “It is what I love most.”
The businessman and executive said he also plans to dedicate more time to philanthropy, advising startups and participating in public company boards, as well as writing a book and working on developing a TV show. He said he also has ideas for new startups that he would like to follow, but made it clear that he had no intention of running them as CEO.
Lore’s departure comes almost four and a half years after Walmart made its biggest acquisition, spending $ 3.3 billion in 2016 to buy the shopping site Jet.com, which he ran and launched just 15 months earlier.
The move was a bold bet for Walmart CEO Doug McMillon, who did so primarily to hire Lore and his executive team, in the hope that they could bridge the huge online sales gap between the legacy retailer and Amazon, while signaling for the talent in the tech industry – and for Wall Street investors – that Walmart was finally serious about reinventing itself for the future of shopping that tech giant Jeff Bezos was creating.
Lore arrived at Walmart with internal knowledge of how Amazon worked – he previously co-founded and managed Quidsi, a collection of online shopping sites best known for Diapers.com, which Amazon acquired for about $ 550 million in 2011. Lore worked on Amazon for a few years before leaving to create Jet.com.
In many ways, McMillon’s bet on Jet.com and Lore was a success. Walmart.com is now the second online shopping site after Amazon in the United States, more than doubling its share of the online sales market to 5.8% during Lore’s term, according to research firm eMarketer. The retailer’s stock price has increased by more than 80% since the acquisition – which is greater than the growth of the S&P 500 during the same period. Walmart is now valued at more than $ 400 billion and has lost much of its reputation as a digital dinosaur in the business world.
“I would like to think that people think about Walmart a little differently than they thought four and a half years ago,” said Lore.
Under Lore, Walmart also expanded its online merchandise catalog eightfold, giving small merchants selling on Amazon another market option to try to diversify their businesses. Walmart also introduced free shipping in two days, as well as next-day and same-day delivery options on a limited selection of goods.
In September, it launched Walmart +, a $ 98 per year membership program with food delivery and other benefits, as an alternative to Amazon Prime. Walmart’s e-commerce sales increased nearly 80% year-over-year in the third quarter of 2020, while continuing to be one of the retail sector’s biggest beneficiaries of consumer buying trends during the Covid-19 pandemic.
But not everything has been smooth. Amazon’s e-commerce business in the United States is still nearly seven times that of Walmart, and the high expenses of the Lore division and large financial losses in the early years created internal tension.
Recode previously reported that the former leader of the much larger and profitable Walmart brick and mortar business was irritated by some of Lore’s internal investments and the credit the entrepreneur earned for the growth of the Walmart truck business, which it was technically an online purchase product, but performed by store employees. Among the internal startups that did not work was Jetblack, a concierge service aimed at residents of a wealthy city. Lore said earlier that he understood the frustration and called the tension “not harmful to health”.
But the losses have prompted Walmart’s leadership to contain some of Lore and the team’s most ambitious plans, including a massive construction of new online shopping deposits that they have pushed to compete better with Amazon, and an aggressive acquisition strategy to build a portfolio of digital consumer products that can help retailers differentiate their Amazon merchandise catalog and attract new customer demographics.
Walmart acquired some native digital brands online, such as Bonobos, ModCloth and Eloquii under Lore, but the executive initially planned to do more business. Walmart ended up selling ModCloth and, once, considered selling the Bonobos as well.
“It’s one of the areas that hasn’t worked out the way I expected it to,” said Lore on Thursday. “These companies did not perform as I expected”.
Lore’s departure was expected at some point due to his entrepreneurial inclinations, and it was more a matter of when than if. His huge compensation package with the acquisition of Jet required him to remain at Walmart for five extraordinarily long years – until September 2021 – to receive full payment, which included an allocation of shares only in the last year of the deal, currently valued at around $ 150 million.
He said the two sides are still working on the financial implications of his departure and are comfortable with his departure a little earlier because the company last year combined much of its e-commerce and physical store divisions into unified teams under Walmart US CEO John Furner.
Lore will remain an advisor at Walmart and said his close relationship with McMillon, the CEO, means that he will do everything he can to help the retail giant – but the underdog of online shopping – to succeed in the future. What does the 58-year-old retail titan need to do to close the gap with Amazon?
“To continue to be bold and not be a follower,” said Lore. “The fast follower strategy is not going to work.”
Marc Lore at Recode Code Commerce 2019