The initial thought may be that it's a bit of an awkward sales venue. The more one thinks about it - and digs - the more this relationship makes sense. And if you did really deep into the details (into a philosophical level), a "whole is greater than the sum of its parts" scenario surfaces. What's this not-really-unusual relationship? The Alkaline Water Company Inc. (OTCBB:WTER) is now selling its Alkaline88 brand of water through Amazon.com, Inc. (NASDAQ:AMZN). Take that Primo Water Corporation (NASDAQ:PRMW)!
But isn't Amazon.com supposed to be a place where you can get great deals on electronics, apparel, toys, and of course, books? What are groceries doing on the menu? Well, you can still get all of those traditional, physical and durable goods through Amazon, but the site has a surprisingly robust (and growing) grocery business too that may end up creating something of a boon for the Alkaline Water Company.
If you've not heard of AmazonFresh yet, it may be because you live outside of Seattle, where Amazon.com is not only headquartered, but where it's been testing a home-delivery program for some basic grocery items like eggs and meat. The company announced a few weeks ago it would add two more such local-delivery venues this year, and as many as 20 new cities to its delivery circles next year.
Make no mistake, however. While Amazon's internal grocery business is still budding, its third-party food and consumer goods resellers have already made groceries and consumables something of a mini-hit, complete with a cult-like following of customers. After it acquired a company called Quidsi - which operates a variety of websites that sell everything from dog food to detergent - saw its sales from diapers.com alone soar from $2 million per year before Amazon.com acquired it to $90 million per year after Amazon purchased the company. Moreover, experts also believe online grocery sales could reach $9.5 billion by 2017. Given Amazon's existing position in the online-shopping world, it's only natural that they should lead the charge... and lead the market.
It's not just the advent of online grocery shopping that's making this such a big opportunity for the Alkaline Water Company Inc., however. It's the merging of two distinct trends at the right time and the right place that could continue propelling WTER shares.
While bottled water has been around for years, it's only just now starting an evolution into its second generation of quality and benefit. Purified spring water was good enough "then", but now, consumers are demanding fortified bottled water, enriched with minerals, vitamins, and now, alkaline. It's a health-oriented idea that competitors like Dasani or Aquafina might not get around to acknowledging until it's too late to catch up with the likes of The Alkaline Water Company.
Better still, the online venue gives WTER an edge on the Primo Water Corporation by doing what Primo Water can't possibly do... supply water online. Primo's "shtick" is offering refills of five-gallon jugs of (admittedly nice) spring water. It's possible Primo could initiate an online ordering and refilling option, but with a five gallon jug of water weighing 40 pounds, delivery will be expensive, and a hassle. (Five gallon jugs aren't exactly small either.) Alkaline88 water, on the other hand, is available in a much handier one-gallon container that can be disposed of - recycled - once emptied. Point being, as the only fortified/enriched mineral water available online in a bulk size, The Alkaline Water Company is in a niche all by itself... online, as well as offline. The Amazon.com venue could end up being a very big deal.
For more on the Alkaline Water Company, visit the SCN research page here.
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