Salesforce bolstered the B2B commerce capabilities of its platform last week by contributing to a $20 million venture funding round for ISV partner CloudCraze.
While digital commerce is an established feature of the business-to-consumer (B2C) space — and prompted Salesforce to splash out $2.8 billion on its acquisition of Demandware last year — it's been slower to catch on in the business-to-business (B2B) sector. In many industries, sales orders are still collected by fax, over the phone in a call center or by sales reps out in the field. But automated, self-service e-commerce processes are on the rise as enterprises begin to digitalize those traditional practices.
Enter CloudCraze, which was bootstrapped by its founders for six years before new management bought the business in August 2015. Led by CEO Chris Dalton, the incoming team have a professional services background in digital commerce. Dalton was previously founding CEO at digital marketing business Acquity, until its acquisition for $316m in 2013 to become Accenture Digital.
Having built out the organization with 60 new hires and investments in product engineering, partnering and sales, the $20 million is CloudCraze's first round of external capital, led by Insight Venture Partners. It will allow the company to build on the triple-digit growth achieved in the past year as it helps fuel the projected $1.1 trillion growth in online B2B commerce by 2020. Existing customers include major brands such as AB InBev, Avid, Barry-Callebaut, Coca-Cola, Ecolab, GE, Land O’Lakes, Kellogg’s, and WABCO.
The CloudCraze solution is a far cry from the highly customized e-commerce storefront projects that Dalton and his colleagues used to work on in their professional services days, as he explained when we spoke by phone last week:
The big thing that's changed is that, when we were pitching to custom-build an e-commerce storefront ... these were huge endeavors. They would take years and years if not decades to build competencies in.
What is happening now is that, because we can deploy on the Salesforce platform and get the price points down into hundreds of thousands of dollars instead of tens of millions of dollars — and deploy in weeks not years — we bring an attractive option for organizations to run a storefront.
An average project takes eight to ten weeks to deliver, with a starting cost of about $250,000. Furthermore, it's already integrated into an enterprise's CRM processes, and stays up-to-date with frequent refreshes. This is a proposition that appeals to a much wider market, he says:
The fact that a company which may not have been proficient in competing in a digital environment now can do so at a low cost point and in an integrated system is a game changer.
Competitors include established traditional commerce platforms such as SAP Hybris and Oracle ATG, whose product innovation is not keeping pace with customer needs, he says.
I do believe we're up against the largest players in the world.
While Salesforce itself has made its own investment in a digital commerce platform with the acquisition of Demandware, Dalton doesn't see the cloud giant as a competitor for CloudCraze.
It is our opinion that the acquisition of Demandware allowed them to secure the retail B2C space for Commerce Cloud. But it doesn't allow them to address the more complicated needs of the business market, who need a more complex pricing scheme and more complex array of products ...
We deal with highly complex global organizations with many different business units within them, each with their own pricing schemas.
Another Salesforce acquisition that could have been more directly competitive was that of Steelbrick, now known as Salesforce Quote-to-Cash, and which includes commerce capabilities. Steelbrick, along with InsideSales, had been a close partner with CloudCraze prior to the acquisition. The relationship continues to be close, says Dalton, and CloudCraze will add integration to the CPQ component of Quote-to-Cash.
CloudCraze differentiates itself by supporting complex product sets and pricing schemas across multiple channels, integrated with customer engagement, marketing promotion and related activities.
By participating in this funding round, Salesforce emphasizes the importance of having a rounded portfolio of solutions in its ecosystem for the B2B marketplace. While its own Quote-to-Cash product has billing functionality, the more sophisticated capabilities of CloudCraze are better suited to the high-end enterprise prospects that Salesforce would like to reach. It may prove crucial for driving continue Sales Cloud growth.
The combination of Salesforce Quote-to-Cash, CloudCraze and InsideSales also provides a useful alternative to Apttus, the enterprise Quote-to-Cash partner that has blotted its Salesforce copybook by also partnering up with Microsoft.
More important than this, though, is simply having the capacity to meet market demand in an aspect of B2B selling that looks set for explosive growth in the next few years, as entire industries embrace digital commerce. Taking into account the pedigree of its management team, CloudCraze seems well positioned to grab a significant share of that market opportunity.