Salesforce Closes E-commerce Gap With £1.9bn Demandware Deal

CRM giant Salesforce has added a potentially vital piece to its product armoury with the acquisition of enterprise cloud e-commerce providerDemandware for a hefty $2.8 billion (£1.9bn).

Costly Purchase

On the surface Demandware, whose customers include Adidas, House of Fraser, Lacoste, Marks & Spencer and Mothercare, seems to be a good fit for San Francisco-based Salesforce, as it fills a digital commerce gap in its product suite.

Salesforce already offers direct marketing and customer support software, but it lacked the tech needed to handle online transactions. This deal will fill that gap and Demandware’s technology will be incorporated into the new Salesforce Commerce Cloud.

And as sales increasingly move online, spending on e-commerce technology are only going to increase. Gartner for example has predicted that worldwide spending on digital commerce platforms is expected to grow at over 14 percent annually, reaching $8.54 billion (£5.9bn) by 2020.

But some observers have said the deal is a tad pricey, and it is certainly Salesforce’s most expensive acquisition to date.

Demandware shares for example were trading at $47.99 (£33.24) prior to the acquisition announcement, meaning that Salesforce paid a significant premium for the company.
“Demandware is an amazing company – the global cloud leader in the multi-billion dollar digital commerce market,” said Marc Benioff, chairman and CEO, Salesforce. “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 and Salesforce share the same passionate focus on customer success,” said Tom Ebling, CEO, Demandware. “Becoming part of Salesforce will accelerate our vision to empower the world’s leading brands with the most innovative digital commerce solutions that enable them to connect 1:1 with customers across any channel.”

There was no word on whether the deal will result in staff redundancies.

Busy Period

Demandware is not the only Salesforce acquisition of late. Last month for example it acquired a deep learning startup called MetaMind for an undisclosed amount. That company, based in Palo Alto, creates deep learning technology that helps “simplify, improve and automate” decision making.

And it is worth remembering that at one stage last year Salesforce itself was at the centre of acquisition rumours.

Both Microsoft and SAP denied they were interested in buying Benioff’s company. They felt its then market valuation of $46bn (£30bn) was simply too expensive.

And only last week, Salesforce announced that it was moving its software onto Amazon Web Services (AWS), after the CRM provider said that Amazon would now be its “preferred public cloud infrastructure provider”.

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