Salesforce buys e-commerce firm Demandware for $2.8bn in cash

CRM specialist to shift decisively towards cloud-based e-commerce in new sales push

Salesforce.com is to acquire rival cloud services company Demandware, which specialises in e-commerce, in a $2.8bn all-cash deal.

The Demandware acquisition, which is expected to close by mid-2017, will add a suite of cloud-based e-commerce services to Salesforce's customer relationship management (CRM) focused line-up. Salesforce's growth has eased up in recent years, despite a string of big-buck acquisitions, but analysts forecast that e-commerce will be the next boom area for cloud computing services.

"Demandware is an amazing company - the global cloud leader in the multi-billion dollar digital commerce market," said Salesforce founder and CEO Marc Benioff. "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."

In a conference call to discuss the deal, chief product officer Alex Dayon said: "The only blind spot we had in CRM was commerce... The future of commerce is really with solutions like Demandware where not only do you provide personalised one-to-one shopping experience on your phone, on the web, but you're also connecting the store into that experience."

Previous Salesforce acquisitions include RelateIQ, bought in 2014. It offered tools to help sales people keep track of their leads and interactions with customers. In 2013, Salesforce lashed out $2bn on ExactTarget, an email marketing specialist, which helped to beef up Salesforce's marketing capabilities.

Analyst group Gartner forecasts that online digital commerce platforms are expected to grow at more than 14 per cent each year between now and 2020, when the market will be worth $8.54bn, it suggests.

Demandware, meanwhile, posted subscription revenue growth of 31 per cent, year-on-year, to $67m in the first quarter of the year, with "live" customers now running at 349, up by a quarter. Live sites, meanwhile, reached 1,590. Churn rates are less than five per cent, it claims. Rivals include NetSuite, Magento, Oracle, SAP and IBM.

Demandware clients include sports and fashion brands Adidas, Puma, Timberland, Fila, Converse and Lacoste, as well as chocolate maker Godiva, retailers Crabtree & Evelyn, House of Fraser, Marks & Spencer, cosmetics company L'Oreal, and consumer electronics giant Panasonic.