Purpose: The purpose of this paper is to explore the microfactory model, the elements that enable it and its implications. The authors argue that microfactories reduce the risks and costs of innovation and that they can move various industries toward more local, adaptive and sustainable business ecosystems. Design/methodology/approach: This conceptual paper explores several processes and practices that are relatively new; hence, it uses online secondary sources (e.g. interviews with CEOs, videos, blogs and trade magazine articles) extensively. Findings: Given its versatility and high automation levels, the microfactory model can fill the gap between artisanal and mass production processes, boost the rate of innovation, and enable the local on-demand fabrication of customized products. Practical implications: Currently, manufacturers generally need to make large investments when launching a new product, despite high uncertainty about customer acceptance, thus risking considerable losses. The microfactory model offers a safer alternative by allowing a firm to develop and fabricate new products and test their acceptance in a local market before mass producing them. Microfactories also enable the local on-demand fabrication of highly customized products. Originality/value: This paper contributes to the discussion on the economic advantages and disadvantages of scale and scope, which have been insufficiently explored in the digital domain.