Demandware and the Future of Retail: A Post-IPO Snapshot

6/27/12Follow @gthuang

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have an open technology platform, so retail businesses can do things like set their own promotions and price delineations and port over their own data and applications. It’s also important, he says, to give retailers control over the look and feel of their e-commerce sites and interfaces and, of course, to make sure they don’t crash.

As for staying innovative, Garf points to the company’s Labs group, which lets developers work on projects outside the product management process. (Every tech company, once it gets big enough, seems to have something like this; how well it works is another question.)

“That team is incented on identifying and executing the next cool and big thing,” he says. “They don’t have to put together a formal business case.” One example from Labs: a social button for Pinterest, the online pin board, that integrates with Demandware’s platform so a customer like Brooks Sports can add the button to its product pages (for social sharing).

Beyond such upgrades, however, Demandware is looking to become the “digital backbone across all devices” for luxury brands, Garf says. “The perception in the marketplace is that we’re a strong player to support medium-size retailers for direct-to-consumer operations.” But increasingly, he says, brands like Pier1, Brooks Brothers, Marks & Spencer, and Lands’ End are using Demandware’s software to handle a broader range of commerce needs and to expand globally. “The mold has been broken,” he says.

The company will certainly face plenty of competition in that arena. Yet Garf sees some relevant lessons from the experiences of e-commerce big boys Amazon and eBay. “They are less about retailing, and more about being the digital intermediary,” he says.

In other words, if Demandware can position itself as the go-to tech provider for many more brands to sell stuff digitally, it should do OK. Garf notes that in the retail industry these days, there are two main categories—commodity and luxury—and you don’t want to get stuck in the middle, as either a retailer or a technology provider.

“We tend to serve the fashion and luxury segment, who’s really focused on brand differentiating,” he says. “Whereas Amazon is focused on the commodity business. They’ve already won that market. We’re targeting a different market.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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