Salesforce.com prepping AppStore and Apex commerce engine

Salesforce.com is pre-announcing AppStore Checkout, a commerce engine for the company's AppExchange marketplace, which will include ordering, billing, invoicing, collection and renewal services through a single salesforce.com interface and across multiple currencies and languages. AppExchange partners will pay a 20-percent commission on amounts invoiced on an ongoing basis, and customers are billed directly by salesforce.com.

However, AppStore Checkout won't be ready for business until December 2007, according to George Hu, chief marketing officer at the company. I asked Hu why it takes year for to deploy a commerce engine, a well known commodity, for AppStore Checkout. He said that the commerce engine would be built as part of Salesforce.com's Apex platform, which currently lacks a commerce component. "What we do in on demand has always been unique, not traditional software," Hu said. "It's different than off-the-shelf software. We are announcing the strategy ahead of time to get feedback from the community."

It sounds more like salesforce.com expects to take a year to bake commerce into its Apex platform, and AppStore Checkout will be the test case. Hu was coy about whether the AppStore Checkout development effort would result in a set of commerce capabilities rolled out to the entire salesforce.com customer base. "Right now we do not have any announcements that we will productize it. Our focus is on the ability to purchase in the AppExchange context," Hu said. Competitor NetSuite has long criticized salesforce.com for lacking a transaction-based engine as a foundation for supporting on demand, financially-oriented applications. 

In addition to AppStore Checkout buying service, Salesforce.com is announcing optional marketing programs for AppExchange software providers. AppStore Referral Program, which doesn't require AppStore Checkout, is designed to help partners market their products for a percentage of subscription or license fees. The Standard Referral Program, set for February 2007 launch, will include premium placement (sponsored links) on searches and AppExchange category listings; marketing programs and eligibility for event participation; and the opportunity to participate in an incubator program for startups. Salesforce.com gets a 10-percent referral fee on all completed transactions.

A Premium Referral Program adds in a demand generation program, training seminars, and premium listings on AppExchange. Hu said that premium partner must meet certain eligibility requirements, such as a specific number of successful deployments, applications certified by salesforce.com, and good ratings from user feedback. "The Premium Referral Program is saying that salesforce.com approves of the applications," Hu said. "It helps customers reduce search costs, for example, by picking out the highest quality email marketing applications. For the Premium Referral Program, salesforce.com will require 25-percent of completed transaction fee. Hu said that the company needs to add seasoned marketing staff and to set up programs prior to the scheduled August 2007 launch.

Providing a store and programs that can handle sales, marketing and distribution for AppExchange partners, integrated with salesforce.com's infrastructure, is a logical next step for the company. More importantly, adding a commerce engine to the Apex platform, no trivial task, could add functionality to fuel the salesforce.com growth engine. Now salesforce.com has to prove that it can turn a vaporware commerce engine into realware in the next 12 months.