Salesforce creates Commerce Cloud with $2.8 billion purchase of Demandware

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Salesforce now has another cloud.

Today, the marketing/sales tech giant announced that it is buying enterprise commerce platform Demandware for $2.8 billion. The purchase will create a Commerce Cloud to accompany Salesforce’s current collection of clouds for sales, marketing, customer service, communities and analytics.

In a statement, Salesforce chairman and CEO Marc Benioff said the acquisition means his company “will be well positioned to deliver the future of our Customer Success Platform and create yet another billion dollar cloud.” The announcement noted that industry research firm Gartner estimates spending on e-commerce platforms will grow more than 14 percent annually.

Demandware’s current clients include Lands’ End, L’Oreal and Marks & Spencer, and the Burlington, Massachusetts-based firm has reported sales growth of over 30 percent for the last 10 quarters.

Gartner VP Andrew Frank told me that the acquisition is “consistent with [Salesforce’s] approach to diversify in order to cover customer relationships, from cradle to grave.” The trick, he pointed out, will be integrating Demandware seamlessly into the existing platform.

Pund-IT Research principal analyst Charles King noted that the $75/share price, which represents a premium of 56 percent over the Tuesday closing price, has been criticized by some financial analysts as being high. That price, he said, lends credence to suggestions that there were other bidders for Demandware, possibly including Adobe or Oracle. Oracle, a key Salesforce competitor, already offers e-commerce services, as does SAP.

King said that the acquisition “closes the circle, especially for customers involved in retail sales,” because Salesforce can now offer tools and services related to making actual sales, in addition to finding, convincing and handling customers.

“If,” he suggested to me, “you’re a commercial shoe company that uses Salesforce to support CRM [and marketing], and you decided you wanted to improve your online presence,” this gives you an integrated solution that many other e-commerce platforms cannot match.

About The Author

Barry Levine

Barry Levine covers marketing technology for Third Door Media. Previously, he covered this space as a Senior Writer for VentureBeat, and he has written about these and other tech subjects for such publications as CMSWire and NewsFactor. He founded and led the web site/unit at PBS station Thirteen/WNET; worked as an online Senior Producer/writer for Viacom; created a successful interactive game, PLAY IT BY EAR: The First CD Game; founded and led an independent film showcase, CENTER SCREEN, based at Harvard and M.I.T.; and served over five years as a consultant to the M.I.T. Media Lab. You can find him at LinkedIn, and on Twitter at xBarryLevine.