Enterprise software company salesforce.com (NYSE:CRM) is no stranger to acquisitions. Since the start of 2016, a total of 16 businesses have been purchased and inserted into the Salesforce ecosystem. The largest acquisition was for app and data integration services company MuleSoft in March for $6.5 billion. While that deal was an attention magnet, CEO Marc Benioff recently said another purchase that happened a week prior also really excites him: the purchase of start-up CloudCraze.
Small headline, big impact
Built natively on Salesforce's software platform, CloudCraze is a business-to-business (B2B) digital commerce company, helping businesses sell products online to other businesses. It will be plugged into Salesforce's existing Marketing and Commerce Cloud platform.
Salesforce hasn't been alone in the commerce acquisition department. Digital content creator Adobe Systems bought out digital commerce company Magento in May. Then there's Shopify, the leader in e-commerce management software, which continues to consistently grow its business by double digits every quarter. Benioff was asked about that battle during the first-quarter earnings call. Here's what he had to say:
I think that as we've expanded our vision of what the customer experience is and where the market is going, of course, we've inspired other competitors to think about the future as well. And that's our job, too, is to create followers. And we've seen a lot of other companies, smaller companies ... really try to look at where are they going in the future. And I think that, that's great because, of course, we want a competitive environment. But our approach is really different because we really see every B2B [business-to-business] company and every B2C [business-to-consumer] company becoming a B2B2C company. And I see that over and over and over again.
Why CloudCraze matters
In the world of e-commerce, a lot of focus has been placed on business-to-consumer (B2C) sites, Salesforce included. Where Salesforce is trying to differentiate itself with the CloudCraze acquisition is the oft-ignored B2B space. Benioff points out that the focus has been on consumer-oriented websites, but for many larger businesses, 80% of sales are actually to other businesses rather than consumers. The goal, then, is to help make that B2B process an easier and more seamless arrangement.
It's worth noting that, while it doesn't have the content creation prowess of its competitors, Salesforce is the leader in client and lead management software. That could be a compelling reason for many e-tailers to go with the Salesforce platform as they look to bring more of their operations into the digital era. That is, in fact, what Salesforce is betting on as it nears its long-standing goal to become the fastest enterprise software company to reach $20 billion in annual sales.
Thus, CloudCraze is another acquisition designed to pair with the rest of the Salesforce software ecosystem and be cross-sold with other services. Just as MuleSoft serves a unique niche in customer relationship management, so does CloudCraze. The difference here, though, is that MuleSoft was used to start up an entirely new service: the Integration Cloud. CloudCraze will be used to augment the already existing Marketing and Commerce Cloud. That's no less exciting a proposition. It was the fastest-growing segment in the first quarter, posting 41% revenue growth over a year ago. If CloudCraze can keep that momentum going, it could go a long way toward helping Salesforce meet its ambitious goals to be one of the largest technology companies in the world.
Nicholas Rossolillo and his clients own shares of Salesforce.com and Shopify. The Motley Fool owns shares of and recommends Adobe Systems, Salesforce.com, and Shopify. The Motley Fool has a disclosure policy.