Oracle Corp. announced today that it plans to buy Endeca Technologies Inc., a major provider of site search and online marketing technology to Top 500 online retailers.
The acquisition puts Oracle into direct competition with IBM Corp. as a provider of comprehensive e-commerce technology systems, says Paula Rosenblum, managing partner with research and advisory firm Retail Systems Research LLC. “This is a serious shot across IBM’s bow,” she says. Oracle did not say what it will pay for Endeca; it says it expects to close on the deal before the end of this year.
By combining Endeca’s technology with the ATG e-commerce platform Oracle acquired last year, Oracle will be able to offer a more powerful suite of web site technology with a strong emphasis on marketing and merchandising—at a time of growing demand for such technology by online retailers, Rosenblum and others say.
“This affirms a developing trend we’re seeing in the rise of the marketing organization within retail,” RSR managing partner Nikki Baird says. “Delivering customer relevancy is critical in every retail channel, but especially online, and Endeca’s addition to Oracle’s portfolio will be a big win during an important shift of power from merchandising to marketing within the retail enterprise. It puts Oracle head to head with IBM.”
Oracle, which is best known as a provider of database software, has been expanding its presence in retail technology over the past several years, picking up providers of web-enabled store systems including Retek and 360 Commerce and price optimization company ProfitLogic. More recently, it has moved into the online retail space, including its June acquisition of FatWire Software, whose technology presents online content targeted to the interests of shoppers.
By adding Endeca, Oracle gains technology that enables online retailers to correlate and analyze the massive amounts of unstructured data on web sites—such as the textual descriptions of products as well as customer reviews—and develop targeted merchandising displays based on customers’ interests. By integrating Endeca’s technology with the ability to manage structured data in Oracle databases, users of Oracle’s technology will have a greater ability to correlate and analyze data and put it to use in marketing campaigns, Oracle says. Structured data can include information such as demographic data organized by ZIP codes or by level of household income.
“This is a strong move by Oracle and signals how seriously they are taking their opportunity in both commerce and content solutions,” says Brian Walker, a retail technology analyst with Forrester Research Inc. “Endeca will allow Oracle to pull numerous pieces together in its portfolio to drive a cross-touchpoint contextual experience together. Of course it will reshape Endeca’s place in the market as well, but overall should help improve the product for Endeca customers over time.”
Endeca has more than 100 customers among retailers listed in the Internet Retailer Top 500, including Staples Inc., No. 2 in the Guide; Wal-Mart Stores Inc., No. 6; eBags.com, No. 114; OneCall.com, No. 212; and Rugs Direct, No. 375.