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Salesforce Acquires Demandware For $2.8 Billion To Create ‘Another Billion Dollar Cloud’ Featured

Salesforce Acquires Demandware For $2.8 Billion To Create ‘Another Billion Dollar Cloud’

WHAT ARE THE KEY TOUCHPOINTS?:

  • Salesforce will provide a tender offer for all outstanding Demandware shares for $75 per share in cash. The deal is worth approximately $2.8 billion.
  • With the acquisition, Salesforce will go to market with the Salesforce Commerce Cloud, which will play an “integral part” in the Salesforce Customer Success Platform.
  • The deal will position Salesforce to “lead the multi-billion dollar commerce market” and will be a “huge growth lever for our business as we look to grow to $10 billion, $20 billion and beyond,” according to Keith Block, Vice Chairman, President and COO of Salesforce.

In a move that will undoubtedly shake up the retail technology ecosystem, cloud-based CRM powerhouse Salesforce today announced that it is acquiring Demandware, a provider of enterprise cloud commerce solutions. The transaction — which is expected to close in Q2 of Salesforce’s 2017 fiscal year — is worth approximately $2.8 billion. Under the terms of the agreement, Salesforce will make a tender offer for all outstanding Demandware shares for $75 per share in cash.

Demandware’s customer base includes a number of notable brands, including Lands’ End, L’Oreal and Marks & Spencer. Salesforce also has captured the wallet share of several cutting-edge brands such as ALDO, HauteLook, Macy’s and Suitsupply, for its ability to create a 360-degree view of customer information, interactions and feedback. The two companies share a number of retail clients, such as Design Within Reach.

As a single unit, Salesforce and Demandware may have the technological chops, large customer base and global reach to become a heavy-hitter in the retail tech market. The acquisition news comes a few months after Salesforce announced it brought in more than $1.8 billion in revenue during Q4 of its fiscal year, and saw year-over-year growth for its Marketing Cloud (31%) and Service Cloud (25%) platforms. During the National Retail Federation’s 2016 BIG Show, Shelley Bransten, SVP of Retail Industry Solutions for Salesforce said in a conversation with Retail TouchPoints that the company wanted to expand into new retail verticals, including big box and even convenience.

Demandware has a large and diverse customer base to support Salesforce’s long-term vision; it also has a comprehensive network of technology partners that it can bring to the table. But most importantly, Demandware has a significant acquisition under its belt: POS provider Tomax, which the company purchased for $75 million in 2015. With the transaction, Demandware created Store Center, an enterprise cloud POS solution that included fixed, virtual and mobile POS capabilities for stores. Store Center was a key part of Demandware’s evolving Unified Commerce concept, which also included predictive merchandising, predictive email and a distributed order management solution.

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With Demandware under its wing, Salesforce is working to position itself as a leader in the CRM space and capture a larger share of the digital commerce market. The new offering, which is aptly called Salesforce Commerce Cloud, will be “an integral part of Salesforce’s Customer Success Platform,” according to a company press release. In the same announcement, Mark Benioff, Chairman and CEO of Salesforce, said that with Demandware, the company “will be well positioned to deliver the future of commerce…and create yet another billion dollar cloud.”

Salesforce customers will have access to the enterprise cloud commerce platform, and Demandware’s customers will be able to tap Salesforce’s array of sales, service, marketing, analytics and IoT solutions, in an effort to deliver more comprehensive, personalized customer experiences.

“Companies of all sizes are coming to Salesforce to help them with their digital transformation,” said Keith Block, Vice Chairman, President and COO of Salesforce, in a conference call this morning. “That’s why this makes so much sense for our customers.”

A Joint History Of Significant Growth

Adding Demandware to its product suite will empower Salesforce to help retailers engage with customers in “entirely new ways,” according to Block. He also reaffirmed Benioff’s statement, indicating that the deal will position Salesforce to “lead the multi-billion dollar commerce market” and will be a “huge growth lever for our business as we look to grow to $10 billion, $20 billion and beyond.”

In a blog post on the Demandware web site, CEO Tom Ebling noted that the two companies “share a similar ‘customer first’ mentality. I am confident that the Demandware team will continue to be an important contributor as part of Salesforce.”

Ebling also alluded to the key value proposition for both companies: “With Salesforce’s broader reach and complementary technologies, we will accelerate expansion of our addressable market and delivery of a unified commerce platform to connect retailers with consumers through any channel, anytime, anywhere.” 

 

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