With the $2.8 billion deal, Salesforce will introduce a new e-commerce offering to go with its customer relationship management software.

Salesforce, the high-flying provider of cloud-based customer history software, announced today plans to acquire Demandware Inc., the leading cloud-based e-commerce technology provider to larger consumer goods brands and retailers.

Salesforce said it would pay about $2.8 billion for Demandware and that the deal likely would close by July 31.

Demandware is the provider of e-commerce technology to 52 retailers in the Top 500 and 18 in the Second 500, according to Top500Guide.com. Demandware clients include L Brands, the parent company of Victoria’s Secret and No. 28 in the Internet Retailer Top 500, L.L. Bean (No. 34), Lands’ End (No. 44), Nike Inc. (No. 47) and Abercrombie & Fitch (No. 58). Salesforce is listed as the provider of customer relationship management (CRM) software for nine retailers in the Top 500, including Coach Inc. (No. 163), The Home Depot Inc. (No. 7) and David’s Bridal Inc. (No. 309). 13 e-retailers in the Second 500 use Salesforce for CRM. 90 Top 1000 e-retailers use Salesforce for e-mail marketing through the Salesforce Marketing Cloud service group–an extension of Salesforce’s $2.5 billion purchase of ExactTarget in 2013.

The Demandware acquisition will provide the basis for a new e-commerce service from Salesforce, Salesforce Commerce Cloud. The new Salesforce offering will compete with other software delivered through the cloud—that is, with the vendor hosting the software and data and clients accessing it via the web. While both Salesforce and Demandware have always delivered their technology through the cloud, they will take on major technology providers that initially provided on-premise e-commerce software but in recent years have offered cloud-based offerings as this model gained traction. Those include IBM Corp., Oracle Corp. and the hybris division of SAP. The new Salesforce Commerce Cloud will also compete with NetSuite Inc., which like Demandware has from the start delivered its software via the cloud, also known as the software as a service model. NetSuite has two clients in the Top 500 and 19 in the Second 500.

Demandware has had incredible growth and success over the last decade. With Salesforce backing and collaboration, Demandware could expand their reach beyond retail,” says Bernardine Wu, CEO of e-commerce technology consulting firm FitForCommerce. “In turn, Salesforce will have a strong commerce platform to offer its customer base.”


Wu adds that the Demandware deal could lead to Salesforce becoming a significant competitor in offering e-commerce technology not just to retailers but also to companies that sell online to other businesses. While business-to-business e-commerce is not currently Demandware’s strength, Wu says, “Salesforce backing could supercharge B2B for Demandware.”

Andy Hoar, who covers B2B e-commerce for Forrester Research Inc., agrees. “This acquisition gives Salesforce just-add-water e-commerce with an impressive client list, $100 million-plus in incremental revenue, and a leadership team experienced in e-commerce,” Hoar says. “Salesforce will focus first on B2C e-commerce, but B2B e-commerce won’t be far behind.”

He also notes that, since Salesforce earlier this year acquired Steelbrick, which provides technology that lets businesses quote prices based on custom configurations,  there has been growing expectation among industry experts that Salesforce would dive further into e-commerce software.

Andy Lloyd, general manager of commerce products at NetSuite says Salesforce’s purchase of Demandware will give it greater exposure in B2C e-commerce, but says the company will have a significant amount of work to do to integrate the datasets stored in each system. “They will have multiple views of the customer,” he says, adding that Demandware is focused on the branded midmarket apparel segment.

That’s a segment that is increasingly looking to manage B2B e-commerce transactions as well as B2C e-commerce transactions. And many of those want to manage both together rather than maintain separate transactional channels, Lloyd says. Demandware’s focus has traditionally been in B2C. Lloyd says NetSuite has more then 3,000 companies running on its integrated platform for e-commerce, including B2B transactions. “Our footprint is a lot bigger, but perhaps less visible,” Lloyd says.


Demandware, which is publicly traded, reported in February that its 2015 revenue increased 44.1% to $75.7 million. Salesforce said today it expects the Demandware acquisition will increase its revenue for the current fiscal year by $100 million to $120 million.

Salesforce says the combination will provide Demandware clients with access to Salesforce marketing, analytics, sales and service technology, enabling them to provide consumers with more personalized service.

“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,” says Marc Benioff, Salesforce chairman and CEO.

“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,” says Demandware CEO Tom Ebling.

In December, Salesforce agreed to buy contract management and billing company SteelBrick for about $360 million in stock and assumption of SteelBrick stock options and equity awards, according to an 8K form Salesforce filed with the U.S. Securities and Exchange Commission.


Saleforce is ranked as the No. 3 North American provider of cloud technology by Forrester Research, with projected 2016 revenue from its cloud service of $7.6 billion. That trails only the Amazon Web Services unit of Amazon.com Inc., No. 1 in the Top 500, and Microsoft Corp.