Salesforce buys Demandware for $2.8b, upping e-commerce clout

Dive Brief:

Salesforce.com Wednesday said it has agreed to buy e-commerce platform company Demandware Inc. for $2.8 billion in an all-cash deal, the largest deal in company history.
The acquisition will create a new business division, Salesforce Commerce Cloud.
Salesforce will commence a tender offer for all outstanding shares of Demandware for $75.00 per share, in cash. The transaction is expected to close in the second quarter of Salesforce's fiscal year 2017, ending July 31, 2016.

Dive Insight:

Salesforce and Demandware already have many clients in common. But Demandware, with an impressive client list of major retailers and brands including Lands' End and Design Within Reach, will help Salesforce fill the e-commerce gap in its solutions portfolio and offer CEOs a more complete package.

As TechCrunch points out, the new deal also puts Salesforce in competition with big names in the retail technology space including Shopify, Amazon, and eBay. Salesforce will likely run side by side with Demandware at first, but eventually fold it into its own stable, as it has done in the past with acquisitions.

“Demandware and Salesforce share the same passionate focus on customer success,” Tom Ebling, CEO of Demandware, said in a statement. “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.”

As e-commerce continues to grow and retailers navigate the challenges omnichannel poses to operations, spending on digital commerce platforms is expected to increase. With this rising opportunity in the space, the deal between the two companies grants Salesforce ready access to Demandware's e-commerce tech capabilities, but also its employees, Andy Hoar, Forrester principal analyst serving e-business and channel strategy, told Retail Dive in an email. This could give Salesforce the room to grow beyond its core business.

"This acquisition gives Salesforce just-add-water e-commerce with an impressive client list, $100M+ in incremental revenue, and a leadership team experienced in this industry,” Hoar said. “At first, Salesforce will focus on B2C eCommerce, but I can assure you B2B e-commerce won't be far behind.”