Why hydration brand Waterdrop is using mall kiosks to expand internationally - Sachse Construction
Topics: Business, Retail & Restaurant

Why hydration brand Waterdrop is using mall kiosks to expand internationally

Vienna-based Waterdrop brought in $100 million in sales since launching in 2017, and it’s now looking to the U.S. as its country to expand to.

Waterdrop currently sells in 10 European markets, including the U.K., Germany and France, and operates 18 of its own stores. The brand has a line of water bottles, and releases designs via influencer and artist collaborations. However, nearly 80% of its company’s sales come from Waterdrop’s patented microdrinks, which are dissolvable cubes that flavor water.

Having launched its U.S. website in 2021, the brand is testing out different U.S. markets by opening mall-based kiosks for roughly six months to a year in New York City and Miami. The company has implemented a brick-and-mortar retail approach that begins with kiosks across its other markets, and is rolling out the strategy in the U.S. According to Waterdrop, kiosks are a cheaper way to gauge customer interest and create buzz, before opening stores.

Aside from exclusive water bottles Waterdrop designs for each city it has a retail presence in, the brand also offers tastings at kiosks where customers can try a selection of its beverage flavors before purchasing. “For each retail launch, our team is dedicated to creating in-store specials,” Murray explained. These include pop-up events and activations, such as exclusive giveaways. “We always want our locations to capture interest, so people feel intrigued and want to learn more.”

To determine new locations for kiosks, Waterdrop’s retail team uses online sales as a guide.

“Once we see considerable traction in a given location, we go in with our retail stores to build the brand on the ground,” Murray said. “This also allows us to get to know local customers, build a strong community and grow overall interest in the brand.” Eventually, Waterdrop follows this with wholesale partnerships as demand increases across each market.

While kiosks have become an important way to test out certain markets, they’re not its only U.S. retail presence. Waterdrop is also currently available at the DTC brand showroom Showfields NYC. The pop-up opened last October for the winter season, and will wrap up at the end of March as the company continues to focus on its branded U.S. stores and retail partnerships. Meanwhile, Waterdrop’s products launched at Erewhon at the beginning of March, and are available at all of the grocery chain’s Southern California locations.

Jeremy Gershonowicz, vp and director of retail, Sachse Construction, which works with DTC brands on building new physical stores, said mobile kiosks can be cost-effective way to test new markets before opening permanent stores.

Usually, a startup brand has to put down a large amount of capital to build a full-size brick and mortar store, Gershonowicz explained. This is especially true in prime mall locations or major retail hubs. Between construction costs, architectural and permitting fees, along with training and maintaining a large staff, “it can be a heavy lift,” he said.

By contrast, brands can run mall kiosks for just a few months, rather than committing to a years-long lease, and don’t have to spend any money on construction or buildouts. However, Gershonowicz said the cost of a mall kiosk can vary widely depending on size or location. “Opening a mall kiosk or cart with a smaller capital investment is often a smart way for direct-to-consumer retailers to test new markets, locations and products in their target demographic,” Gershonowicz said.

So far, the kiosk approach is working for U.S. newcomer Waterdrop — and will continue to be as it heads west.

“In the next year we’re hoping to open three to five more locations across the country,” Murray said. Over the next few months, Waterdrop plans to open kiosks in a few more major U.S. cities, such as Austin and Los Angeles.

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