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Definition
An industry where the creation of products and services is
home-based, rather than factory-based. While products and
services created by cottage industry are often unique and
distinctive given the fact that they are usually not mass-
produced, producers in this sector often face numerous
disadvantages when trying to compete with much larger
factory-based companies.
The main risk that is being faced by this industry is from the
factory based medium or large industries which are again
capital intensive in nature. This is because of the fact that
these large industries utilize all sorts of cost effective
technologies which enable them to supply the products at low
price. On the other hand, the Cottage Industry is basically
labor intensive and utilizes traditional techniques in
production process which are generally not cost effective in
nature which escalates the price of their product. The
products supplied by the Cottage Industry thus face risk of
extinction if they don't receive enough financial or other form
of support from the government.
Cottage industry
A cottage industry is an industry—primarily manufacturing—
which includes many producers, working from their homes,
typically part time. The term originally referred to home
workers who were engaged in a task such as sewing, lace-
making or household manufacturing. Some industries which
are usually operated from large centralized factories were
cottage industries before the Industrial Revolution. Business
operators would travel around, buying raw materials,
delivering them to people who would work on them, and then
collecting the finished goods to sell, or typically to ship to
another market. One of the factors which allowed the
Industrial Revolution to take place in Western Europe was the
presence of these business people who had the ability to
expand the scale of their operations. Cottage industries were
very common in the time when a large proportion of the
population was engaged in agriculture, because the farmers
(and their families) often had both the time and the desire to
earn additional income during the part of the year (winter)
when there was little farming work to do.
The use of the term has expanded, and is used to refer to any
event which allows a large number of people to work part time.
For example, eBay is said to have spawned a cottage industry
of people who buy surplus merchandise, and sell it on their
auction system.