Cloudy Salesforce has written a $2.8 billion cheque for Demandware whose software is used by businesses to run e-commerce websites.
The move is part of a cunning plan to open a new front as Salesforce wants to take more market share from traditional software providers such as Oracle and SAP who offer cloud-based e-commerce services.
The e-commerce market has been growing as retailers expand their online presence, boosting demand for software that helps manage functions such as payment processing and inventory management.
Salesforce appears to have paid rather a lot for the company to see off any of the other outfits which were bidding for the company. Word on the street is that Adobe and Oracle were also snuffling around.
Demandware has not been doing that well. Its shares, which have fallen about 21 percent in the past year. Its customers include Lands’ End, L’Oreal (because it is worth it) and Marks and Sparks. It has reported sales growth of more than 30 percent for the last 10 quarters.
While Salesforce has beaten up everyone in the CRM war, it still needs to stay in front. To do that it needs lots of products which is something it lacks.
Global spending on digital commerce platforms is expected to grow over 14 percent annually to about $8.5 billion by 2020, Salesforce.
The deal, slated to close in Salesforce’s second quarter ending July, is expected to increase the company’s 2017 revenue by about $100 million-$120 million.
Salesforce had forecast fiscal 2017 revenue of $8.16 billion-$8.20 billion in May.
