For centuries feeder towns and markets have played an important part in trade routes. Images of traders on camels on a dusty and sometimes inhospitable Silk Road comes to mind. Even today, understanding how these markets and towns function, is essential to any business wishing to increase sales in these cities, towns or villages.
What are feeder towns?
Feeder towns are hubs for product supply and distribution. Purchases take place in the market, or customers make use of agents, that act on their behalf.
Some markets focus on category-specific products, such as electronics or pharmaceuticals. These markets can cover a wide geographical area, even spanning national borders.
Buyers willingness to travel, depends on the product category, price, and availability. For example, in Kano, Nigeria, I met buyers from Niger and Chad shopping for photography equipment in the market. These traders said that lower prices and the product range available in Nigeria, convinced them to make the long journey.
But not all feeder markets are in large cities such as Lagos, Nigeria or Addis Ababa, Ethiopia. Smaller towns, including third and fourth-tier cities, can also act as feeders, servicing smaller communities and villages with a range of products. Infrastructure and trade routes play a critical part in determining the location of these markets.
Feeder markets provide customers with benefits beyond price and product availability. Category-specific markets also make it easier for customers to compare prices. Buyers can coordinate loads and deliveries to towns and villages, to save on distribution cost. Sellers often provide credit to trusted customers, and break-bulk for buyers in smaller villages.
Wherever you are in Africa, feeder towns play an important part in your distribution network. Understanding your product and category flow in and around the country, is critical to your business.