Salesforce has completed its $2.8 billion acquisition of e-commerce platform vendor Demandware, and now has the job of adding yet another cloud to its ever-broadening portfolio. While some observers have complained Salesforce overpaid for Demandware, there's general agreement that commerce was a major hole in its lineup and Salesforce needed to do something.
I wrote about some of the pros and cons buying Demandware presents Salesforce at the time of the deal's initial announcement. Now that it has closed, I spoke with Constellation Research VP and principal analyst Cindy Zhou for her view on what Salesforce needs to do to make Demandware's integration and go-to-market a success. What follows is an edited version of that conversation.
CRInsights: Why was this acquisition a must-do for Salesforce?
Zhou: They needed a commerce solution to round out their portfolio. For example, if you look at the landscape and their competition, Oracle has Commerce Cloud and SAP has Hybris as examples. Before the SAP acquisition, Hybris was a small European company growing quickly because they had an elegant UI. Since the acquisition, Hybris has become a core part of SAP's cloud strategy. Salesforce needed a solution and Demandware has a solid base of marquee customers to add to the company.
I like the synergy Salesforce and Demandware can have if they thoughtfully proceed with the points of integration with Marketing Cloud. Marketing Cloud's host of features can help with the front-end customer acquisition campaigns to perform ad management, email marketing and social listening. Then Demandware for the commerce experience and value on the back-end, with links into the supply chain, order fulfillment and inventory management. Tie this in with Sales Cloud and Wave analytics, the opportunities for deeper customer insight get really interesting.
CRInsights: There's some decent overlap between Demandware and Salesforce's customer base. Does this make Salesforce's job easier in pushing Demandware?
Zhou: Salesforce needs to create a cohesive story of how you go from the marketing cloud to commerce cloud and vice versa —to show the journey from campaign to commerce.
If you look at Demandware's customer base, it's largely retailers: Fashion companies, sportswear, beauty and health. It makes sense. With the Marketing Cloud, Salesforce targets other B2C verticals, such as financial services, media companies, etc. It can add another element to what Demandware does. As an example, think about leveraging Commerce Cloud/Demandware to go through the sales process of a new credit card or account, as an example.
Here's what concerns me, and the opportunity for Salesforce. I look at what Salesforce has done with Pardot, which is bolted on to Sales Cloud as a B2B marketing solution. Then they have Marketing Cloud, which is B2C. But the CMOs of the future are looking at this as one converged customer experience. A lot of companies are becoming B2B2Cs.
Salesforce has to look at, 'who is the audience?' 'Who is the buyer?' A lot of times with big e-commerce retailers, they'll have a chief retail officer or chief revenue officer which has authority over both marketing and sales. I'm very interested in seeing the elements of how Salesforce brings together Sales Cloud, Marketing Cloud and Commerce Cloud and present it all as one cohesive story. They're all linked.
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