Friday, June 13, 2008

Demandware buys IP of n2N Commerce

By Christopher Calnan

Woburn-based software maker Demandware Inc. has acquired the e-commerce technology of a local customer that recently went out of business and will use that technology to complement the suite of e-commerce applications Demandware already offers.

At an auction last month, Demandware paid an undisclosed amount for n2N Commerce Inc.’s intellectual property, which Demandware plans to integrate with its own software, including a contact center application that Demandware is developing, CEO John Pearce said.

Cambridge-based n2N Commerce shuttered its business in January after its sole customer, Victoria’s Secret Direct, dropped n2N while the company was developing Victoria’s Secret’s new website.

The site was scheduled to launch during the second half of the year. But n2N, which employed 70 workers, closed shop just one year after it received $30 million in venture capital, one of the largest Web 2.0 financings in the nation during 2007.

N2N Commerce’s demise was prompted by the company’s “extremely ambitious” plan to customize complex retail websites using on-demand e-commerce platforms, Pearce said. That presented a difficult task because major retailers such as Victoria’s Secret typically operate websites with legacy systems that are unique to each customer, he said.

Pearce said of n2N’s approach, “They were single-customer specific.”

Besides DemandWare, e-commerce platform makers using the software-as-a-service model include London- and New York-based Venda Inc., Canada-based Truition and California-based MarketLive Inc. Such technologies are faster and cheaper to deploy, but customers give up a measure of control to the company that is hosting the applications, said Andrew Gelina, CEO of Needham-based Syrinx Consulting Corp.

Demandware, founded in 2004, completed a $9.1 million Series C round of financing last month, increasing the total venture capital received by the company to $31 million. Investors include Cambridge-based General Catalyst Partners and Waltham-based North Bridge Venture Partners.

Pearce said he expects the company to complete additional rounds of financing to fuel Demandware’s business. “I’m sure there will be activity in that area,” he said. “It’s part of growing a company.”

Although some retailers continue to use customized e-commerce platforms, others are adopting the SaaS model, said Neal Boornazian, CEO of Wilde Interactive LLC, a Holliston-based consulting firm.

“There is a part of the industry in which customers need an on-demand model,” he said. “I don’t see it going away.”