Think buying factory direct always means lower cost? Think again. Learn the truth about traders, manufacturers, and hidden supply chain margins.
Why “Factory Direct” Isn’t Always the Smartest Move
Most founders believe that buying straight from a manufacturer guarantees lower costs and higher quality. It sounds efficient until your “factory” disappears mid production or your next batch arrives with a mystery formula.
Behind every product, there’s a complex network of players: traders, sub suppliers, and agents, all moving parts, all adding value or cost. And unless you’ve spent time sourcing on the ground in China, Vietnam, or India, it’s almost impossible to tell who’s who.
The truth? Factory direct isn’t always cheaper. Sometimes, it’s riskier.
Understanding Who’s Who in Your Supply Chain
Not every “manufacturer” you meet online actually manufactures.
Some run factories. Others manage relationships with factories. And a few simply rebrand products from multiple sources.
Here’s the breakdown:
- Manufacturers make the product. They own machinery, materials, and people.
- Traders source from multiple factories, manage production, and handle communication.
- Agents connect you to the right partners and oversee quality, pricing, and logistics.
Each role exists for a reason. The key is knowing which one fits your brand’s stage and risk tolerance.
When a Trader Is Actually an Advantage
Working with traders gets a bad reputation, often seen as “paying a middleman.” But a good trader can give you leverage that a factory will not.
They can:
- Combine smaller orders across factories to meet MOQs
- Offer faster turnaround by working with flexible suppliers
- Protect pricing by managing material sourcing and negotiations
- Step in when a factory underdelivers
Imagine you’re testing a new skincare line and can’t meet a 3,000 unit MOQ. A trader can source 500 units across multiple factories, letting you validate the market before committing big.
That’s not inefficiency. That’s strategic flexibility.
Why Factory Direct Can Cost You More
A factory direct setup can look great on paper until you discover what’s missing.
No communication buffer. No quality gatekeeper. No backup supplier when production stalls.
Factories focus on throughput, not brand protection. And when things go wrong, you’re the one stuck handling replacements, logistics, and customer complaints.
Many DTC brands learn the hard way that saving 5% upfront can mean losing 30% in refunds, delays, and rework.
5 Red Flags That Reveal a Fake Manufacturer
Not sure who you’re really talking to? Watch for these signs:
- Generic catalog with hundreds of unrelated products
- No factory address or photos beyond stock images
- Slow answers when you ask about production processes
- “Partner factory” mentions with no clarity on who that is
- Inconsistent sample quality across batches
If it feels vague, it usually is.
Building a Smarter Sourcing Strategy
The best brands don’t obsess over cutting every middleman. They focus on building transparent, reliable partnerships, whether that’s a trader, agent, or manufacturer.
Strong sourcing isn’t about skipping steps. It’s about understanding where value is created, where risk hides, and who truly controls your product.
How Move Supply Chain Helps
At Move Supply Chain, we help DTC brands see beyond the factory direct myth. Our team vets suppliers, identifies hidden intermediaries, and builds sourcing systems that protect your margin, not just your cost.
From supplier diagnostics and factory audits to transparent sourcing maps, we make sure you know exactly who’s producing for you and how to scale safely.
Because in supply chain, it’s not about who sells to you, it’s about who’s really producing for you.