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Salesforce ventures into e-Commerce with $2.8bn acquisition

Salesforce 1Salesforce has taken another step towards the e-Commerce market after announcing it has signed a definitive agreement to acquire Demandware for $2.8 billion.

Demandware provides a cloud-based e-commerce platform and related services for retailers and brands worldwide, going public during 2012 after raising $88 million in its initial public offering of $16 a share. Salesforce has announced it will commence a tender offer for all outstanding shares of Demandware for $75 per share, with the deal set to complete by July 31, 2016, the end of Salesforce’s second quarter.

As with the Marketing Cloud proposition, Salesforce is seemingly happy to pay healthily above share value to break into new markets when it cannot develop the capabilities organically. The company acquired ExactTarget for $2.5 billion in 2013, this was previously Salesforce’s largest acquisition, which built the foundation of the Marketing Cloud proposition.

“Demandware is an amazing company—the global cloud leader in the multi-billion dollar digital commerce market,” said Marc Benioff, CEO at 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.”

The idea of ‘omnichannel’ business would generally not be considered new to the industry, though this is one of the first major steps Salesforce has made in diversifying its core business offering. The company is widely recognised as a leader in the CRM space, though the Demandware acquisition offers a number of upselling opportunities for its current customer base (those who are using Marketing Cloud and its CRM offering), who may well favour having their CRM and e-Commerce platform from the same vendor.

Demandware currently works with a number of brands around the world including Design Within Reach, Lands’ End, L’Oreal and Marks & Spencer, to deliver customized experiences for customers across web, mobile, social and in the store. The acquisition is expected to increase Salesforce’s revenues by approximately $100 million to $120 million through the remainder of the financial year.