Salesforce has jumped into the digital commerce market with both feet by acquiring ecommerce platform Demandware, according to an announcement on Wednesday. Salesforce will pay $75 per share, or $2.8 billion, and when the deal is completed at the end of July, Demandware will become Salesforce Commerce Cloud.
Gartner predicts the global ecommerce market will grow by more than 14 percent annually to over $8.5 billion by 2020.
Demandware is based in Burlington, Massachusetts, and traded on the NYSE, with share prices just below $48 at Tuesday’s close. Salesforce estimates it will bring in an extra $100 to $120 million in the second half of fiscal 2017, but Demandware’s value to Salesforce will largely come through providing ecommerce to its existing customer base, and in bringing Demandware’s enterprise customers onto Salesforce’s core CRM products.
“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.”
Richard Stevenson, from cloud-driven ecommerce software provider ePages.com, points to the huge market for ecommerce.
“It comes as no surprise that cloud players are eyeing up the booming ecommerce market. Global e-commerce is set to grow from a total of $1.5 trillion in 2015 to $3.5 trillion in 2019. Whilst around $2 billion a year is being spent right now on ecommerce tech, there is a further $6 billion to be earned from associated design and support services,” Stevenson told The WHIR. “The rapid growth and high customer values of ecommerce pure-players has also not gone unnoticed. We are seeing more web hosting providers, of all shapes and sizes, seeking to adopt or update ecommerce offerings in light of such potentials. The strongest ecommerce platforms will be the ones that can fully enable cloud agility, and innovate on the real world retail trends like omnichannel, mobile and marketplaces.”
Demandware’s customers include globally recognized brands like L’Oreal and Marks & Spencer, and the company enables them to deliver personalized experiences with software for web, mobile, social, and in-store shopping.
“Demandware and Salesforce share the same passionate focus on customer success,” said Demandware CEO Tom Ebling. “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.”
It appears from comments in a blog post by Ebling that Demandware employees will all join Salesforce.
A report released in March by aheadWorks shows the Demandware platform is used by 1.2 percent of the Alexa top 1 million sites. It trails far behind Magento and WooCommerce in that regard, but is still tied for 11th among all ecommerce providers, and adding even a small percentage of Salesforce’ customers would easily push it into the top ten.