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This has been a busy time for Salesforce, with a number of acquisitions that seemed to be a defiant quest for relevance in the face of its faltering relationship with Microsoft. But those acquisitions -- particularly its purchase of e-commerce technology vendor Demandware -- demonstrated that Salesforce CEO Marc Benioff and company have a clear strategic agenda.
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The purchase of Demandware for $2.8 billion in July 2016 significantly increased the functionality of Salesforce's Customer Success Platform. The deal brought a large amount of cloud commerce capabilities Salesforce didn't have, especially point-of-sale (POS) components.
The Demandware platform augmented Salesforce's market reach beyond CRM. Now, Salesforce can call itself a single-source service provider for the entire customer experience across many vertical markets.
All technology acquisitions seek to fill in functional gaps as completely as possible, but the Salesforce-Demandware union fits especially well together. Salesforce is possibly the most mature and complete customer data management platform in the cloud, but it's woefully behind in core e-commerce technology components; Demandware was strong in facilitating cloud-based transactions, providing POS sites for desktop, laptop and mobile platforms as well as on-premises capabilities.
"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 one-to-one with customers across any channel," former Demandware CEO Tom Ebling said at the 2016 Salesforce XChange conference. The statement may sound like hyperbole, but given Salesforce's market footprint, Ebling's comment may understate the potential upside.
If making inroads into the retail domain is Salesforce's end goal, then the multichannel aspect of Demandware's e-commerce technology solves potential challenges. The technology extends across the consumer retail spectrum and buys Salesforce entry into the online battleground currently dominated by Amazon. And it simultaneously positions the company to offer its customer service and management functionality to walk-in businesses.
Closing the customer loop in retail
Adding full POS tools to the Salesforce Commerce Cloud will make the software an attractive choice for retailers. But the merger of technologies has deeper implications; it may catalyze similar acquisitions as Salesforce's competitors scramble to acquire their own market-ready POS resources.
Why? At the heart of the Salesforce-Demandware deal is a subtle-but-significant merging of operational frameworks: Salesforce is a B2B company and Demandware is a B2C company, and this merger blurs the lines between them. If managed properly, the merger may usher in new supply-chain management methods and remove the distinction between logistics and purchasing.
The upside for retailers is potentially even greater. CRM and e-commerce technology have forever altered how businesses interact with customers, from identification to marketing and selling to service. Multichannel data acquisition of customer profiles, behaviors and demographics merges with descriptive and predictive analytics, thus taking customer relationship to new heights of efficiency and satisfaction.
All that functionality and potential are now available to retailers who were Demandware customers, opening up a huge market for a one-stop-shopping concept that conceivably will allow retailers to provide customers the augmented service B2B partners get from the existing Salesforce ecosphere.
In addition, Demandware's retailers can participate in the collection of nonidentifiable customer transaction data, which is tailor-made for Salesforce's behavioral trend analysis. The importance of that data in providing a competitive advantage against online retail giants like Amazon is certainly not lost on Salesforce's Benioff.
The hybridization of CRM and digital POS may seem proactive, but it's actually a reactive strategy. That's because the retail industry has been moving in this direction anyway, due to the increased purchasing power of millennials. This generation of consumers learned from an early age that the internet is one big department store and therefore has certain expectations about the online shopping experience that may seem frivolous or peripheral to older buyers. These expectations include online price matching, click-and-collect (online purchase followed by store pick-up) and remote returns.
Those services are hit-or-miss today in the retail universe, despite the best efforts of Amazon, Wal-Mart and some major pizza chains. But Salesforce may be leveling the playing field universally by offering an all-in-one supply-chain and purchasing tool that gives the smallest mom-and-pop shop a dizzying array of consumer conveniences found only among the largest retailers.
Salesforce's successful integration of Demandware e-commerce technology could establish a new paradigm for cloud services that improves the customer journey.
A look at the Demandware-Salesforce deal
Get up to speed on Salesforce Commerce Cloud capabilities
Ask the Expert: How has the Demandware purchase affected Salesforce?