After building confidence that we had proven one assumption, we were off to the races to see if we could continue proving more.
We took a 4-day road trip to two major urban markets in Kenya: Nakuru and Eldoret. Eldoret is a day's drive from Nairobi, with an incredible view of the countryside. Rolling hills sit underneath the highway as you travel through the higher altitudes and dense forest.
With 7 million smallholder famers in Kenya, many can be see working their land from the roadside. They have an easier task of bringing their harvested produce to the roadside to fetch a competitive prices.
For those farmers tucked into the distance, their plight remains a daunting task. Without this access to markets, the market must come to them. Traders from urban markets, we found out, travel great distances to secure and buy produce from rural farmers.
Wanjiru, an onion trader of 15-years, told us she loathes making these trips to rural areas. But for her, it comes with the territory. In order to secure the highest-quality onions for her customers, it is a must. Who else, she asks, can I trust to bring me the quality of onions my customers demand?
Right now, the answer is very few people. Once in a great while, when she is sick or unable, her partner may go in her place. What she risks in sending someone with less than ideal knowledge, is a huge markdown in the price she can sell for.
We uncovered that traders in urban markets undertake great risk and costs to procure their produce, such as:
Opportunity Costs: leaving their stall may mean losing long-term customers
Risk of Theft: when Wanjiru goes to Tanzania, she has to take cash with her. Buying $3,500 worth of onions in cash is extremely risky.
Transaction Costs: Traveling (even via public transit) and accommodation are not insignificant costs, especially when done twice a month
The value proposition to the trader is simple. If they were able to secure high-quality produce without leaving their stall, they would save a lot in reduced costs and risks.
The interviews have pointed us in a very specific direction provide a trader with a premium delivery service of high quality produce, and they will be willing to pay for it.
Up next: proving the value proposition...