One of the bigger topics of conversation at Dreamforce this week will be the introduction of the Commerce Cloud, the end result of Salesforce’s $2.8 billion acquisition of e-commerce platform Demandware.
Strictly speaking this will be the re-introduction of Commerce Cloud as, in common with many elements of this year’s conference, the first formal public outing came last month at the Shop.org Digital Summit in Dallas.
I caught up with Commerce Cloud CEO Jeff Barnett on Dreamforce eve, who gave me the ‘elevator pitch’ for the new offering:
Commerce Cloud as part of the CRM suite - that’s the big news. It completes a key part of the B2C CRM platform, servicing the commerce part of the journey. Then you link that up to the other Salesforce clouds. What’s happening in the Marketing Cloud can now inform Commerce Cloud and vice-versa. Salesforce will about the ‘last mile’ - what did the customer actually buy?
The Demandware acquisition is a big deal for Salesforce, not just financially. The firm's Q2 2016 Shopping Index suggests that the number of shoppers visiting digital commerce sites has increased 24% year-on-year, with 47% of all traffic to these sites worldwide coming from smartphones, 44% of traffic to desktop sites and 9% of traffic from tablets.
Having Demandware inside the Salesforce tent opens up access to more than 1,800 e-commerce sites in 53 countries, selling more than $16 billion in merchandise sold in 2016. It’s already big business and there’s considerable cross-sell and up-sell opportunity for other Salesforce clouds in the customer line-up. Barnett notes:
The customer overlap between us is not massive today, so there is some tremendous opportunity here. We have great street cred when it comes to B2C commerce and we have some of the world’s greatest brands as customers. By the same token, Salesforce has a much wider swatch of coverage across industries. The acquisition will enhance our attractiveness into those industries. We can now bring a bigger story to customers, which is all those other Salesforce clouds.
High-profile customers include Puma and Cole Haan. One recent prominent addition to the list is PetSmart, the largest specialty pet retailer in the North America with more than 1,450 pet stores in the US, Canada and Puerto Rico, which selected the Demandware platform to grow its long-term omni-channel capabilities to allow customers to shop and engage how, when and where they wish.
The omni-channel focus is an extension of the firm’s mission statement that it brings pets and their owners closer together "every day with every connection”. As Mike Goodwin, PetSmart CIO, observes:
The term 'every connection' in our mission really matters to us. We selected Demandware because of its leadership in the e-commerce space and the firm's demonstrated commitment to evolving its products in ways that align with PetSmart's long-term strategy to expand our e-commerce capabilities and omni-channel shopping and engagement experiences for pet parents everywhere.
At Dreamforce this week we can expect more emphasis to be placed on the AI elements of the offering for product recommendations and predictive sort. The vision is to offer results and recommendations based on consumer’s likelihood to engage with product search results. From the vendor side, the inclusion of Commerce Insights, is intended to help retailers understand the correlations between the products customers purchase in order to enable better and more sophisticated merchandising and store planning.
While this week will be all about Einstein, Demandware’s interest in AI is longer-standing. Barnett explains:
As Demandware we had invested in predictive intelligence and we had predictive analytics engines for e-commerce. We have predicted email functionality so that retailers send out promotional emails based upon what they know and infer about the shoppers. That’s valuable especially with the anonymous shoppers. They’re very different to the customers you have in your CRM system.
We can also expect some play around the fact that Commerce Cloud will support Apple Pay for the mobile web. This plays to what Barnett calls, “the reset of the consumer base”. While pitching the iOS handsets out there, Demandware remains device agnostic with a commitment to an open platform that supports multiple payment vehicles, including credit cards, PayPal etc.
That’s going to be particularly important given that, according to the Demandware Shopping Index, consumers will place more online orders on smartphones than on any other web-based device by the end of 2017. Currently, according to Q2 Shopping Index, 27% of orders came through smartphones, 13% from tablet and 61% from computers.
One interesting metric that Demandware has been talking about is the notion of Buying Intent, which addresses that thorny question of all retailers, offline and online - who’s got serious intention of buying something and who’s “just browsing, thanks’.
According to the Q2 2016 Shopping Index, 16% of shoppers show real Buying Intent on digital channels, with mobile shoppers expressing Buying Intent increasing 8% year-on-year on phones. Breaking that down further, 14% of that mobile Buying Intent came from smartphone users and 20% from tablets.
Another significant conclusion from the Q2 study is that more users look to social media for shopping decisions, with 2.7% of all digital traffic now comes from social media, up 55% year-on-year, and drives 1% of orders.
Some of this has surprised Barnett:
Desktops and tablets have lost share, year-on-year. We were surprised to see that trend. We thought that tablets would be the future. It all comes down to the trend towards the shopper having a multi-step journey today. Not that long ago, you did some digital marketing and that would lead to X% conversion to a sale.
You can see industry data out there that tells you that shoppers who have been introduced to a product via a review or a referral from a friend are two or three times more likely to end up buying than as a result of traditional digital marketing.
This means rethinking the relationship between retailer and customer and where they meet, says Barnett:
With social media platforms, it’s a more exploratory process. You might start on social media where a friend introduces a product on Facebook or you spot something on Pinterest. That may then lead to an order that might be delivered or which you might to order online and then collect in-store. It’s all about transitioning multiple touchpoints.
Social is becoming an increasing spend for retailers who believe that it where they are meeting their customers. Commerce that happens via a social media platform or which is initiated via social media is only something like 3-5% among branded retailers, so it’s a small piece of the pie, but it’s the fastest growing.
A highly competitive area of the market that is set to offer great opportunity.