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Salesforce Takes a Stake in CloudCraze - A Snap Analysis from Down Under

A few days ago B2B e-commerce vendor Cloudcraze announced that it secured a $20 million funding of Insight Venture Partners under participation of Salesforce Ventures. Cloudcraze is one of few ecommerce platforms that are fully built on Salesforce’s Force.com platform, which gives them a very good position inside the Salesforce ecosystem. Integrations with Salesforce Sales- and Service Clouds come easy, enabling fast implementations and go-lives. Additionally, having a B2B focus, Cloudcraze serves a market niche that is poised to grow significantly in the next 3 – 5 years. Forrester already in 2015 predicted a market growth to more than a trillion dollar in the US alone. Gartner positions them in the Visionary quadrant of their 2016 Magic Quadrant on Digital Commerce.
Gartner MQ Digital Commerce 2016 - Source: Gartner

Given all this I was somewhat surprised when Salesforce acquired the B2C focused ecommerce platform Demandware in May 2016, considering that Salesforce has B2B roots, too. Additionally, Demandware is not even built on the Salesforce stack. On the other hand, Demandware is categorized a leader in the 2016 Gartner Magic Quadrant for Digital Commerce and with its B2C focus offers new markets for Salesforce, competing with SAP, Microsoft, and Oracle on one hand, and ecommerce pure-plays on the other. These are markets that Salesforce could have been locked out without this acquisition as Demandware was the last independent leading ecommerce platform.

My Take

With this investment Salesforce shows again that they treat ecommerce seriously, without being in the immediate need to explain their strategy around two different ecommerce platforms, as the investment is led by Insight. The investment should help making sure that Salesforce Sales Cloud deployments get connected with a Salesforce based ecommerce instead of one of the other strong ecommerce platforms that are available. It also gives a measure of security against competitors trying to enter the Salesforce ecosystem.
Salesforce also could get access to a richer CPQ functionality than its own product offers (Apptus, another CPQ vendor in the Salesforce ecosystem last year decided to port its apps to Azure).

For Cloudcraze this funding round means an even deeper immersion into the Salesforce ecosystem. The company has been platinum partner before; now the orbit has become even closer. The investment as such may well enable them to move up from the Visionary quadrant to the Leader quadrant, given a sizeable investment that is targeted towards ‘supercharging development’ and supporting ‘continued growth in the United States and EMEA’. The investment might also mean a step on a path that ultimately leads to being acquired.

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