By Leena Rao
IBM made a major purchase today in the commerce and retail world—DemandTec (NASDAQ:DMAN) a retail marketing and merchandising software company. IBM is acquiring DemandTec (which listed on the Nasdaq) in an all cash transaction at a price of $13.20 per share, or approximately $440 million.
DemandTec provides retailers and e-commerce companies with tools to transact, interact, and collaborate on core merchandising and marketing activities. DemandTec’s cloud-based analytics software allows businesses to examine different customer buying scenarios, both online and in-store, so retailers can spot trends and shopper insights to make better price, promotion, and assortment decisions that increase revenue and profitability.
For example, retailers can predict how consumers will respond to a price change before making the change. Or a merchant and supplier can work together to understand how one shopper segment differs from another to create a targeted merchandise plan.
DemandTec’s use of cloud-based price, promotion and other merchandising and marketing analytics helps companies better define the best price points and product mix based on customer buying trends. Essentially, DemandTec uses data analysis and forecasting to make the retail world smarter.
DemandTec customers include Best Buy (NYSE:BBY), ConAgra Foods (NYSE:CAG), Delhaize America (NYSE:DEG), General Mills (NYSE:GIS), H-E-B Grocery Co., The Home Depot (NYSE:HD), Hormel Foods (NYSE:HRL), Monoprix, PETCO, Safeway (NYSE:SWY), Sara Lee (SLE), Target (NYSE:TGT), Walmart (NYSE:WMT), and WH Smith. DemandTec also has a portfolio of 31 patents in the areas of pricing, response analysis, and promotion analysis.
For IBM, the acquisition is all about its smarter commerce initiative. IBM estimates the market opportunity for Smarter Commerce at $20 billion in software alone.