January 23, 2014, 3:50 PM

Demandware buys order management company Mainstreet Commerce

With the acquisition, Demandware enables retailer clients to offer “buy anywhere, fulfill anywhere” shopping. Mainstreet will be available to the vendor’s clients for an extra, as-yet-undetermined fee.

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E-commerce platform vender Demandware Inc. has purchased order management provider Mainstreet Commerce. The purchase price was not disclosed. Mainstreet’s entire staff will join Demandware.

The acquisition, announced today, provides Demandware with order management technology that enables retailers to ship online orders from stores, or to allow shoppers to pick up their web purchases in their local stores, CEO Tom Ebling says.  “While Demandware has always solved the ‘buy anywhere’ problem, with this acquisition, we now also solve the ‘fulfill anywhere’ problem,” Ebling says.

Mainstreet’s software allows online or store-based orders to automatically ship from a store, warehouse or via drop-shipping, based on a number of factors supplied by the retailer, such as its inventory levels.This system is sometimes called distributed order management. Mainstreet also handles automated payment processing, order processing and shipping management, with an inventory tracking system that keeps retailers from overselling items as orders come in and ship out from various locations. 

Demandware provides e-commerce platform technology to to 20 retailers in the 2013 Top 500 Guide and eight in the 2013 Second 500 Guide. Those 28 merchants brought in a combined total of $1.61 billion in online sales in 2012, earning Demandware a No. 9 ranking in the e-commerce platform category of the 2014 Top Tech Guide, which  ranks the leading technology and service providers by the combined web sales of their clients in the Top 1000.

Some of Demandware’s larger clients include Carter’s Inc., Brooks Brothers Group Inc., Deckers Outdoor Corp. and Barney’s New York, according to Top500Guide.com.

Two retailers in the Top 1000, Ashford.com and Boot Barn Inc., use Mainstreet Commerce’s order management. Boot Barn is a customer of both Mainstreet Commerce and Demandware, according to Top500Guide.com.

Both Demandware and Mainstreet are software-as-a-service, or SaaS, technologies, for which clients pay a monthly fee to access over the Internet rather than licensing, installing and maintaining the software on their own.

Mainstreet was previously available as an add-on module via Demandware’s Link marketplace, which provides e-commerce technology features and functions from other vendors preconfigured to work with the Demandware platform, Ebling says. As a result of the acquisition, existing Demandware clients using Mainstreet—of which there are 20—will eventually have new capabilities for facilitating multichannel shopping through the platform, and new clients will be able to launch the Mainstreet order management system more quickly than before, he says.

“One of our post-acquisition priorities will be to build a deeper, high-functioning combined solution that will further enhance both omnichannel capabilities and implementation cycles,” Ebling says. Demandware is still working out the pricing scheme for Mainstreet, which historically charged a flat monthly fee plus a per-order transaction fee, he says, without giving that exact price.

Apparel retailer Vineyard Vines has been a Demandware and Mainstreet client since 2012. In that time, co-founder of Vineyard Vines Ian Murray says, both technologies have “helped power significant growth of our digital channel, a meaningful increase in store sales and enabled inventory optimization through both warehouse and store fulfillment.”

The acquisition is “an incremental positive to what we believe is one of the best mid-cap software growth companies in the market today,” wrote Richard Davis, managing director at investment firm Canaccord Genuity, who covers enterprise software, in a research note.

Mid-sized retailers in particular could benefit from the move, Davis says.

“Often Demandware’s core multinational brand customers keep their legacy order management systems when they subscribe to Demandware; however, mid-market firms sometimes prefer to stick with a single vendor,” he writes. “Mainstreet gives Demandware that capability.”

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