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Salesforce.com Acquires Demandware
Salesforce.com plans to leverage Demandware's capabilities to build out its Commerce Cloud.
Posted Jun 2, 2016
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Salesforce.com yesterday finalized a definitive agreement to acquire Demandware, a provider of enterprise cloud commerce solutions, in a transaction amounting to roughly $2.8 billion. The deal is expected to close during the second quarter of Salesforce.com's 2017 fiscal year, which begins May 1 and ends July 31. Until then, Demandware will continue to operate as an independent company.

With the acquisition, Salesforce will extend its reach into the digital commerce market—a market that Gartner predicts will grow to $8.5 billion annually by 2020. The CRM company's intention is to eventually develop the Salesforce Commerce Cloud, which will ultimately integrate into its Customer Success Platform. Following this assimilation, Salesforce users will be granted smoother access to Demandware's e-commerce capabilities; Demandware customers—which include high-end retailers Marks & Spencer and L’Oreal—will be able to enhance their operations with Salesforce's sales, service, and marketing capabilities.

Marc Benioff, chairman and CEO of Salesforce, said in a statement the deal was about "the future of commerce":

"Demandware is an amazing company—the global cloud leader in the multibillion dollar digital commerce market. With Demandware, Salesforce will be well positioned to deliver the future of commerce as part of our Customer Success Platform and create yet another billion dollar cloud."

"Demandware brings Salesforce...closer to owning the full customer life cycle,” wrote Eric Berridge, CEO of IBM's Bluewolf, a Salesforce consultancy and implementation services provider, in an email to CRM magazine. Seamlessly leading customers to purchases is "a huge value-add for organizations trying to reach their business objectives," he adds.

"This points to how important digital commerce is to so many businesses, and how being close to the transaction, ordering, and product browsing is to the customer relationship," says Mike Elmgreen, CMO of Handshake.

Also vocal on the matter is Chris Dalton, CEO of CloudCraze, provider of a e-commerce platform, and a platinum partner on the Salesforce ecosystem. The announcement is exciting "in that it reinforces the notion that Salesforce is relevant in the commerce arena," Dalton says. "That's something that we've been working with them closely on for over a year—to get them to be more enthusiastic about driving the message around commerce" and integrating related processes into its platform.

But Dalton points out that companies will likely still need to approach their B2B operations from a different angle, as selling to other companies calls for different methods. "There's  a pretty strong distinction between B2B and B2C customers," Dalton says. CloudCraze customers are often operating "under a multinational conglomerate, and have many different business units underneath that structure," he says. Business-facing firms often need to know more about their buyers, their relationships to the company, and the regions they are in, to offer them appropriate pricing and products. Consumer-facing outfits, on the other hand, will encounter more anonymous shoppers that do smaller transactions and don't make repeat purchases.

According to Dalton, Adidas is just one company that uses Demandware for its consumer-facing storefront capabilities, and CloudCraze for its B2B offering. "There are all kinds of nuances" in the two offerings, Dalton says. One is that Demandware's pricing model is based upon the gross volume of sales. "B2B customers who are moving hundreds of millions of dollars' worth of products aren't interested in being charged based upon the transactive volume going through the system, so I think there's going to be some inherent changes that are going to be necessary for the Demandware company underneath the Salesforce umbrella now."

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