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Salesforce buys Demandware as cloud-based commerce gains

In a reflection of the growing importance of ecommerce for large retailers and brands, Salesforce has acquired Demandware for $2.8 billion, paving the way for next-generation cloud-based applications and artificial intelligence solutions.

Demandware’s cloud-based ecommerce platform will join Salesforce’s own direct marketing and customer support offerings on the cloud. Both also offer mobile capabilities and are likely to try to build this area of the business by connecting the dots on mobile marketing and sales to demonstrate value.

“This acquisition allows Salesforce to potentially link their enterprise productivity tools with actual purchases in the rapidly-growing ecommerce space,” said Wilson Kerr, vice president of business development and sales at Unbound Commerce. “The overall U.S. etail market has grown 15-plus percent in each of the last 6 years, a rate of growth roughly ten times higher than overall retail, which expanded just 1.5 percent last year.

“Mobile likely plays a role because Salesforce offers cloud-based solutions for both the Internet of Things and App building – two very hot areas,” he said. “By connecting these tools to actual conversion metrics via real transactions, Salesforce can demonstrate value in a very real way.”

One-to-one marketing
Cloud-based solutions such as those offered by Salesforce and Demandware are increasingly important in the mobile space as marketers look to take advantage of artificial intelligence, the Internet of Things and other next-generation platforms that are sophisticated in their use of data to provide contextually relevant, personalized one-to-one engagements.

The Demandware deal gives Salesforce a bigger role in cloud-based ecommerce at a time when demand is growing, helping it better compete against the likes of Amazon Web Services, IBM Commerce on Cloud and others.

IBM has made inroads into mobile commerce this year with its Watson-powered artificial intelligence solutions.

For example, Gifts retailer 1800Flowers now offers an IBM Watson-powered gift concierge that uses cognitive capabilities to tailor product suggestions for shoppers (see story).

Bear Naked is bringing a new spin to finding the right granola flavor via a mobile-optimized site that leverages IBM Watson to customize flavor suggestions based on users’ responses (see story).

An omnichannel world
Recent research from Forrester Research clouding adoption is likely to hit a tipping point this year as businesses’ use of SaaS as a replacement for existing software hits critical mass.

Forrester expects that innovation in the cloud market will be driven over the next two years by enterprise app migrations and new microservice-based app designs. The next wave of growth in the cloud market will be driven by enterprises embracing platforms such as AWS, Google, IBM, Microsoft and Salesforce for customer-engagement apps, analytics and core-business apps.

“In an omnichannel world, the customer is king and Salesforce is the leader in CRM software,” Mr. Kerr said. “Demandware’s clients can leverage this customer interaction data to increase retention and deliver the right calls to action to the right customers at the right time, to drive sales.

“This is a win-win and shows how hot the ecommerce space is right now,” he said.