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5 Steps to Grow a Water Delivery Service

It may be easy to think that with new, ever-accessible water filtration systems gaining popularity, business for water delivery companies is less than optimal. But this isn’t the case! Despite a few industry hurdles over the last several years, the water supply industry is still on the rise. After all, clean drinking water is a product that’s always in demand, and recently there’s new offerings entering the marketplace drawing consumer attention. So, since the industry is growing, the question is: how do I scale up my water supply business?

The key is becoming well-informed about industry demand and taking action.Thankfully, we have several strategies you can implement in your business venture to get the ball rolling faster than it already is!

1. Understand the Current Marketplace

To grow in the water supply industry – or any industry for that matter – you have to understand the state of the market. According to IBIS World Report, the water supply industry has expanded over the last five years to 2019, at an annualized rate of 1.0% to $7.2 billion, including a 1.6% increase in 2019 alone. This health partly had to do with suppliers adapting to the demand for new industry products, taste preferences, and eco-friendly supplies, as well as American consumers turning away from high-sugar drinks and toward health-beneficial drinks. Additionally, since the economy has fared well over the last few years, consumers with higher disposable incomes purchased more industry products like bottled water, sparkling water, flavored water and ice. 

Luckily, the industry outlook indicates continued growth through 2024 at an annualized rate of 1.2% to $7.7 billion. Additionally, the number of companies operating in this industry is expected to decline through 2024, meaning less competition for companies continuing business. Still, the industry is being faced with its own set of challenges – for instance, the shifting demand for filtrated, bottleless water systems – so knowing how and where to expand to see the maximum profit from your business venture is key.

2. Broaden your Target Market 

Who are your current customers? Which markets are they in? Knowing the landscape of the market and the type of consumers in each segment, as well as what they are demanding, will help you scale up your customer base and maximise your revenue. Many times, you don’t even have to amplify your supplies; you can simply offer what you have to a larger consumer base.

First, know that the B2B marketplace – specifically, ecommerce for business purchases – are on the rise and will keep growing for the foreseeable future. Do you have an online marketing system in place? If not, it’s time to act! The U.S. B2B e-commerce market is expected to double in revenue by 2020 and reach an approximate worth of $1 trillion. Research indicates that 55% of business consumers have purchased workplace food and beverage products online, and plan to do so again. Marketing your brand to B2B buyers is a win-win – business needs in water span across most products you probably offer (botted, 5- or 10-gallon, botttle-less coolers, etc.) and they’re likely to sign up for monthly or annual contracts, boosting your lifetime value (LTV) with those customers. And here’s a tip: don’t pigeon-hole yourself to large business prospects only. Offering your services to small businesses as well will help maximize your client opportunities and earnings, since small companies tend to grow which means their needs do as well. If you can get a small company on board early on in their lifespan, they’re more likely to grow with you.

Secondly, consider offering bulk product to wholesalers. Wholesale opportunities are one of the most effective ways to sell water because of the ROI on higher volume sales and larger geographic area that can be reached, as well as desirable benefits for customers. Many suppliers who sell to wholesalers earn back their start-up expenses after selling to just a few wholesale companies. At the end of the day, selling wholesale will increase your service area, and therefore amplify your customer base and brand recognition. 

On that note, if you want to increase your revenue, consider increasing your geographic coverage. More specifically, think about expanding into regions with high demand for products, large populations, or low competition among other established companies — all of which will boost your ROI. For instance, bottled water is relatively more expensive than other water sources, so its demand depends on income levels and water quality relative to location. According to IBIS World, consumers in urban regions – especially densely populated ones – tend to buy more bottled water and therefore suppliers who service them tend to see higher overall sales volume. Similarly, if you market to regions with higher levels of disposable income, you should see benefits from consumers purchasing more profitable products. When expanding your geographic coverage, don’t forget to research population vs. establishment density in each area — if you can target areas with high demand for water and low suppliers, you can find yourself some great opportunities.

3. Increase Product Offerings

Since Americans are buying more varieties of water products than ever before, it may be time to restructure and/or upscale your inventory and offerings. If you’ve only been offering bottled and still water until now, why not expand to 5- gallon coolers, point of use (bottle-less) coolers, filtrated water systems, sparkling beverages, and even other beverages? While bottled still water has historically taken the lead in popularity in the American market (it accounted for 64.4% of total industry revenue in 2019), other products are creeping in and driving revenue for many water suppliers nationwide.

Something you probably know about by now is the growing preference for bottle-less water filters. Americans are starting to move from bottled water to coolers and pitchers with filtering systems for a number of reasons, including the price of continued bottled water purchases and the go-green movement. But new forms of sparkling water, vitamin-enhanced water and other “premium” water products have propelled industry growth, so many suppliers are adapting these products to their inventory. Accordingly, IBIS World experts foresee soft drink and “premium” water drink consumption rising past 2019.

Some products that are gaining popularity and can boost your profit/customer base are:

  • Seltzer and sparkling water 
  • Alkaline and mineral water 
  • Point of use (bottle-less) water coolers
  • 5- and 10-gallon coolers
  • Flavored and vitamin water
  • Ice 

The more products you offer, the more types of clients and accounts you can generate. For instance, there is a demand for many of the products listed above in workplace, wholesale or grocery store, and residential settings. While flavored water still represents a smaller piece of the pie compared to still water, it is the fastest area of growth for the Bottled Water Production industry in recent years.

4. Go Green

As touched upon briefly, there’s a growing demand for eco-friendly brands and packaging in the water supply industry. As of this year, some of the top industry players (such as Nestle and CocaCola) have developed ways to conserve water and offer steps towards eco-friendly packaging to appeal to their increasingly environmentally-concerned consumer base. Accordingly, there is a recent push towards packaging with sustainable materials (for example, plant-based plastic rather than petroleum-based). To gain customer recognition, support, and loyalty, as well as compete with this push for sustainability, it’s a good idea to consider how your company can fit in the movement. 

Before the idea of scrapping your packaging method and starting from scratch scares you off, know that this shift may have long-term benefits to your revenue. The price of plastic materials and resin is expected to rise at an annualized rate of 2.2% over the five years to 2024. So now is a good time to take small steps towards the shift. And it doesn’t have to happen overnight – many companies set tangible, forward-looking goals for their company. For example, in 2018, Nestle announced that they’re aiming to make 100% of packaging recyclable or reusable by 2025. You can start by researching new packaging designs that require less material and can be recycled – in other words, get the job done for less money in a more eco-friendly way. It’s a win-win for you and your customers.

5. Amplify your Brand

Branding is arguably one of the biggest drivers of revenue for your company.  This is because it has the most influence over whether a customer will do business with you, and continue to do so. Especially in the food and beverage industries, where the product on its own often sells itself, customer attention and preference will gravitate towards brands they “like.” So it’s very important with your water company to get your brand in front of the public – in terms of image, logo, and company ethos. There are several marketing strategies for gaining brand exposure and building rapport with your target consumer. Check out our infographic below.

Are you a water supplier looking to expand into the coffee space, as well? Read about some key steps to get started here.

Building out your sales team is a great place to kick-start your water business. If you’re looking for some additional assistance with bringing in new, quality customers to grow your revenue, give our lead generation model a look. We focus on bringing you new true-intent leads so you can focus your attention where it matters most – on managing your water delivery service!

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