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What does Salesforce.com’s Acquisition of Demandware Mean?

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.
— Marc Benioff, Chairman and CEO of Salesforce.com

On June 1, 2016, Salesforce announced that it was buying Demandware for approximately $2.8 billion. The transaction will be complete in its upcoming Q2 FY17, on July 31, 2016. Headquartered in Burlington, Massachusetts, Demandware provides retailers with cloud-based e-commerce solutions.

For those who have been monitoring recent activities in the industry, the news is hardly surprising. Salesforce has been moving in the direction of e-commerce technology for some time. It makes sense that the CRM leader is adding it to its sales, service, and marketing cloud offerings.

The Move Towards E-Commerce

Salesforce began setting the stage back in 2013 by building out its marketing offerings. The Sales Cloud and Service Cloud in Salesforce help internal workgroups (sales and service teams, respectively) track and manage customer interactions.

In June 2013, Salesforce.com purchased ExactTarget (now known as the Salesforce Marketing Cloud). This extended the activities of another internal workgroup – marketing professionals – to better manage their interactions with customers. A marketing automation platform, the Marketing Cloud gives companies tools to interact with customers in a personalized, direct manner. While ExactTarget was focused largely on the B2C market, Salesforce.com’s acquisition included Pardot, itself acquired by ExactTarget in October 2012. It also expanded its offerings to include the B2B markets.

Over the past few years, competitors have been making similar strategic moves. SAP acquired Hybris, the e-commerce software supplier. Oracle and Adobe have been attempting to create marketing software clouds of their own. Oracle has been scoring marketing deals with its e-commerce solutions. Adobe is rumored to be looking at Magento or Shopify.

In all of these cases, Salesforce.com continues to serve the needs of professionals who interact with customers.

Salesforce.com moved towards an e-commerce offering in earnest in September 2014, forming a partnership with CloudCraze (which has since been acquired by Salesforce). Self-described as “the first and only proven Enterprise eCommerce Platform developed natively on the Salesforce Platform,” CloudCraze expanded its e-commerce services for Salesforce and provides for the B2B market. For the first time, Salesforce could directly serve customers through shopping mechanisms.

With the addition of predictive analytics tools to the Marketing cloud in 2015, Salesforce bolstered its ability to understand how consumers behave. You can read more about predictive analytics here. In a nutshell, predictive analytic software anticipates future behaviors based on patterns discovered in other data. It examines information from sources like emails, prior customer transactions, website visits, and – importantly – purchasing decisions. These capabilities help identify, segment, and prompt new actions with customers.

Demandware

With this most recent acquisition of Demandware, Salesforce is now positioned to become a definitive competitor in e-commerce.

Demandware produces software technology specifically for B2C retail e-commerce. This move also furthers the arc the company is making from serving professionals who serve customers to serving those customers directly as, in this case, they shop online.

Salesforce is already the clear leader in CRM with its strong platforms for Sales, Service, and Marketing professionals. It stood to lose ground in the software industry if it could not match its competitors’ expansions into e-commerce.

More importantly, businesses who offer an integrated ecosystem to their customers – seamlessly melding architecture and data, ease of use, and cross-system capabilities – have an important edge in this increasingly fast-paced and competitive e-commerce environment.

A platform that offers everything – sales, service, marketing, analytics, and e-commerce – is a compelling technology suite for Salesforce users.

With Salesforce Marketing Cloud, companies are able to target and acquire new customers. With predictive analytics and marketing automation, businesses can use machine learning and integrated web and email campaigns to market smartly and effectively. With CloudCraze, they can sell the products they’re marketing in B2B retail commerce. And now with Demandware, they can sell the products in B2C retail commerce.

Demandware is one acquisition closer to Salesforce.com’s vision for the ideal “full arc” customer interaction ecosystem that businesses, together with their customers, would like.

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