A factory rejects business buys factory rejects or “factory seconds” and resells. It is a popular small business, particularly in lower-income areas.
What is factory rejects
Factory rejects are items which, through minor fault of manufacture, are sold to for a reduced rate, rather than being discarded. Such goods are often resold at this lower rate after failing the factory’s quality inspection/quality control.
Types of reject businesses
We’ve seen a few of these businesses in South Africa, reject clothing is probably the most well known. But there are a few others:
- Reject & Offcut Sweets, Broken Chocolate and Biscuits
- Items with damaged packaging
- Factory shops selling rejects
How to start this business
This is probably the industry I get the most enquiries about, which escapes me as it is so simple. The problem is that we have too many low-effort entrepreneurs who want to make quick money and don’t want to put in the required work
I have covered everything you need
You research the industry you want to enter
Common sense tells you the best source is the manufacturer and any rejects you buy from a third-party, you are going to pay a premium because that person is going to put their profit on as well.
I have mentioned the framework you can use (when you went through the motions of starting your business. But your analysis will look as following:
Do you know a manufacturer
Do you know someone that works at a manufacturer
Is there manufacturer(s) in your area or close to you
Anything too far away will eat into your profit in logistics fees. At least when you are small. But there is no harm in asking what they do with their rejects if it is something you are interested in that is not too far away.
All you have to ask them is what do they do with their rejects. And have money to buy it and a place to sell it (even from home) and you are in business.