A factory shop, factory outlet or outlet store is a physical or online shop in which manufacturers sell their stock directly to the public. A factory shop business is the process of running your own shop where customers could buy goods and products directly from the manufacturer – usually at a discount. Factory shops sell various different types of products from reject and damaged goods as well as excess and end of range products that have not sold too well. A factory shop can also be used to sell smaller quantities direct to the public from a company that usually sells bulk or B2B (business-to-business).
This business serves customers looking for discounts. It helps keep the prices of goods low or at least at a reasonable level because there is no need to pay for transportation, advertising and other services.
There are two predominant business models in this category: owned and operated in which the factory shop is owned by the manufacturer. Or third party owned, here a manufacturer partners with a third party to open a shop (usually on the manufacturer’s premises). For entrepreneurs the latter is the most often adopted model – the challenge being the right partner to work with.
Tools & Equipment
For physical retail space, you’ll need a basic retail store shopfitting kit which includes shelves, shopping baskets, pricing gun, labellers, point of sale etc.