The Implications for Shopify as Salesforce Acquires Mobify
It's official.
Salesforce has given up on mid-market, competing with Shopify, and is headed back up-market.
The Mobify acquisition shows a new fixation by the Salesforce crew: Adobe. Squeezed between Adobe Experience Cloud on one end and Shopify's template-driven eCommerce on the other, Salesforce is trying to chart its own path: pure cloud in the upper mid-market.
Front-end has long been the Achilles heel in Salesforce strategy (pre-Adobe Magento too!). Littered with pivots between Javascript pipelines, mobile reference templates, etc that always seemed 2 years behind the times - confusing both customers and partners. As soon as you completed one implementation, "new guidance" was released - wasting sometimes hundreds of thousands of dollars in development by partners.
The secret of Demandware is that it was never quite multi-tenant SaaS. Are you on the same codebase if each part of the engine is a customizable XML configuration file running on a multi-tenant PaaS grid? Not exactly.
Shopify is jumping for joy at this Mobify announcement. I tend to think it views the headless commerce world with skepticism - entirely too complex and slow-to-market for what most brands need in the new world.
I think they are right. Flexibility is nice. But speed kills.
To clarify, I don’t technically mean that Salesforce is abandoning trying to sell to the mid-market. I mean more that it's not as great a fit as it once was, and adding on complex acquisitions only makes the case for me. If this trend keeps up, Salesforce ends up looking more like ATG in the cloud than any kind of streamlined SaaS offering.
The reality is Demandware was always disruptor to: on-premise and custom installations, which include Oracle and IBM. It didn't have the low-end open-source stigma of Magento in the Enterprise market, either. That is still true! At this point, Shopify and BigCommerce are trying to disrupt both Magento and Shopify. (BigC doesn't really deserve to be in the convo at the moment) To its credit, Salesforce recognized this a couple of years back. The problem is, price is not just about the platform. It's about the entire ecosystem, including your agency partner contract. Cutting your price by a third to win business does help. But if you don't revamp your platform from the ground up, you don't solve some of its underlying issues which hurt your long-term appeal in the segment. Ultimately Shopify Plus won over quite a number of customers who not too long ago chose Demandware back in the Rich Lyons heyday ;-). Speed to market and the app ecosystem are the deciding factors now. Which ultimately greatly compresses margins for development agency partners. But that is a post for another time.
