For centuries feeder towns and markets (e.g. silk route) have played an important part in trade. Even today, understanding how these markets and towns function is important to any business wishing to make an impact.
What are feeder towns? – Feeder towns are hubs for product distribution, e.g. Mercato in Addis Ababa. Customers and retailers collect products from feeder markets or arrange for distribution to their various towns and villages. Some feeder markets are also category specific. Feeder markets can cover a wide geographical area. For example, Kano in Nigeria also services neighbouring countries such as Niger and Chad.
Coverage of feeder town – The coverage of the feeder town depends on product category, price and availability. In Accra, Ghana, I met retailers selling satellite dishes purchased from markets in Lagos, which they profited on even after factoring in the bus fare to collect the dishes. 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 an important part in determining the location of the feeder town.
Value added services – Feeder towns provide customers with a range of products. Category clusters in markets also make it easier for customers to compare prices. Distributors and wholesalers in feeder markets can also arrange for transport and provide other services such as credit.
Wherever you are in Africa, feeder towns play an important part in your distribution network. Understanding your product and category flow is critical to your business.