Salesforce rallies in retail with purchase of Demandware e-commerce

Now that Salesforce has purchased Demandware, it's positioned to compete with vendors like Oracle and even Amazon for market share.

With a recent purchase of Demandware, an e-commerce platform, cloud-based CRM vendor Salesforce is trying to strengthen its foothold in an area where it needed support: e-commerce. With purchases like the Demandware e-commerce platform, the original Sales Cloud continues to be bolstered with new features, and new clouds have been developed to further the platform across multiple industries.

While Salesforce is a customer relationship management vendor, it is trying to stake its claim as a full-featured CRM, which includes more comprehensive web-based technologies, such as e-commerce. While Salesforce can lay claim to a superior database for management of sales contacts and processes, it was lagging in its ability to combine that data with web-based customer data for insight about customer contacts. According to some experts, competitors like Oracle were sometimes able to win a CRM deal based on the company's e-commerce capabilities. Part of the goal is to make interaction with customers more seamless, regardless of channel -- web, phone, SMS text, social media and so forth -- and regardless of their interaction in the buying cycle -- that is, whether it's for sales, marketing or customer service reasons.

With the acquisition of Demandware for the hefty price of $2.8 billion, Salesforce's largest purchase yet, the Commerce Cloud could become a major player in the e-commerce arena for both large and small businesses.

"The walls between sales, marketing and service have come down," Salesforce COO Keith Block said. As businesses use customer data as a tool of the trade in competitive differentiation, seamless customer experience management has become a critical competitive edge.

Why Demandware?

Since its public offering in 2012, Demandware e-commerce has made a splash. It has garnered customers including Adidas, L'Oreal and Land's End, with revenues of $67 million for the most recent quarter, with each quarter boasting larger numbers than the last.

With online shopping so integral to the retail industry, Salesforce can now compete with the likes of Amazon and eBay -- as well as with CRM vendors like Oracle -- and strengthen the funnel of potential companies that would like to use a suite of applications that work together. The Demandware e-commerce software enables companies to garner more insights about their customers and integrate that knowledge with the Sales Cloud tools to have a better understanding of the customer lifecycle. As Salesforce targets specific industries, such as healthcare, finance, nonprofit and government, a large piece of the market was being missed without a retail-based application to add to the mix.

With this acquisition, Salesforce will also have to bring cohesion to its various offerings and demonstrate how these Clouds will work together and stand alone. So much focus has been made on CRM, and many people view CRM as Sales Cloud only. However, the Customer Success Platform should be the real focus, and it would be nice to see some pricing and value-add messaging, which circles around a combined suite, rather than a pick-and-choose model that feels fragmented at times and struggles with the mission of Salesforce account execs.

At the same time, any acquisition can be tricky, and Salesforce has a track record of fluid -- and choppy acquisitions. So the jury still out on how the Demandware e-commerce purchase will go. While acquisitions like SteelBrick configure, price, quote software has been relatively seamless, the integration of Radian6, for example, has allowed the social monitoring proposition to languish, not flourish. Industry observers will be watching.

Perhaps at this year's annual conference, Dreamforce, this idea will become more cohesive and will continue to expand upon itself. One can see the combination of Commerce Cloud with other Salesforce clouds, including Service, Marketing, Analytics, IoT (internet of things) and App Cloud, as Salesforce is taking on the status of a Microsoft with its Office suite, with all competitors falling further and further behind with each acquisition Salesforce makes. 

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