Salesforce Eyes E-commerce with $2.8B Demandware Buy

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E-commerce continues to be a highly competitive space as tech companies race to help retailers attract shoppers. The latest example is Salesforce's announcement on Wednesday that it has agreed to acquire Demandware, a digital commerce company, for $2.8 billion.

E-commerce continues to be a highly competitive space as tech companies race to help retailers attract shoppers. The latest example is Salesforce's announcement on Wednesday that it has agreed to acquire Demandware, a digital commerce company, for $2.8 billion. The acquisition, which is Salesforce's largest to date, spearheads a new product line for the company called the Commerce Cloud. "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," said Demandware CEO Tom Ebling in a statement.

Worldwide spending on digital commerce platforms is expected to grow at over 14 percent annually, reaching $8.5 billion by 2020, according to Gartner. Indeed, "Internet-enabled retailers are on the rise bolstered by always-on connectivity, hypertargeted marketing, images, and personalization," noted Kleiner Perkins partner Mary Meeker in her latest trends report.

At the same time, driving e-commerce sales continues to be challenging. Despite e-commerce's rapid growth, the majority of retail sales are still taking place in brick-and-mortar stores, reports eMarketer. In 2015, e-commerce accounted for only 7.1 percent of all retail sales in the U.S., according to the research firm.

As the sluggish adoption of digital buy buttons suggests, shopping is about more than the transaction. Online retailers have yet to surpass the reliable shopping experience consumers have come to expect at brick-and-mortar stores. Consumers know that if they find an item they like at a store, they can purchase it and carry it out, whereas the amount of shoppable items on sites like Pinterest is more limited, and retailers are still working on meeting consumer shipping demands.

"Retail is an experience, and mobile and digital commerce have enormous opportunities to transform retail, but they're not there yet in delivering the full retail experience," notes Scott Arpajian, CEO of app discovery platform Softonic. "We see lots of developers working on commerce solutions but frankly they're still catching up."

The Commerce Cloud could be a step in the right direction. Salesforce says Demandware's customers, which include brands like True Religion, L'Oreal, and Lands' End, will be able to leverage its "sales, service, marketing, communities, analytics, IoT and platform solutions to deliver a more comprehensive, personalized consumer experience."

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