The abbreviations OEM and ODM are often used in the manufacturing industry. Original Design Manufacturer is also known as OEM, and OEM stands for Original Equipment Manufacturer.
Despite the fact that a lot of people frequently mix up the two terms and use them similarly, they don't really mean the same thing. This article covers what these terms mean and helps you decide which is the best option for you.
Original Design Manufacturer (ODM) - contract manufacturing of products that already exist under your brand name. In fact, using already existing goods in China.
The majority of the businesses and sellers you hear about who import from China and sell on Amazon essentially use this strategy. Alibaba.com is the most often used resource for finding ODM manufacturers, AliExpress.com, GlobalSources.com, and Made-In-China.com are further sources.
Pros:
helps to save time - it is possible to get the final product without ever having thought about its desigansaving resources (you do not spend money on developing and implementing models in production).
evaluation in advance how your products will look like.
many ODMs in the market already have experience in working with Amazon sellers.
low minimum order quantity requirements.
Cons:
your product is not unique (and you are lucky if the factory sells the same models in different countries). But more often there is a situation when the manufacturer is focused on more than one country.
fewer opportunities for customization
if a product is not targeted at a specific market, then it is usually not adapted for this market. For example, sizes, design and other detais such as the motor power of electric bike.
Original Equipment Manufacture (OEM) - contract manufacturing of products with a unique design or special characteristics. Basically, the development of sketches of models is done by you, and all the necessary preparation for starting production and the sewing process itself is performed by a Chinese contractor.
Pros:
unique design, which gives a serious competitive advantage in the market.
low financial costs. You do not have to spend money on renting or buying out production space, equipment and machinery, hiring and training personnel, preparing the necessary documentation, working out the first batches, and much more.
Cons:
your company must have the necessary resources: a staff of designers, technologists, an experimental workshop.
implementation of constant control over production, in order to ensure that your design decisions are carried out exactly as originally intended, relentless monitoring of the production process in a Chinese factory is necessary.
High minimum order quantity requirements
Different countries have different production standards, requirements and features. Keep this in mind when working with foreign contractors. OEM production will require either your own staff in China, or a reliable, conscientious agent.
Another thing - you should take a few measures to prevent your supplier from becoming your competitor. It is always better to make precautions and register your trademark in China (before production begins) and request a non-disclosure, non-use, and non-circumvention agreement from your supplier.
To sum up - If you have a great idea for a new and innovative product, then OEM manufacturing is likely for you. On the other side, ODM manufacturing is what you need if you want to import a pre-existing product and rebrand it under your own name with no product changes.
If you are still not sure what business models suits you best, you may always contact us for consultation. Moreover, when you do everything yourself, the risks and headaches fall entirely on you. Sometimes it's easier to work through an agent such as Sourceware.
Cooperation with us is what will save you from many problems, help you establish successful production in Chinese factories and lead your company to high income! You may learn about more advantages of working with Sourceware on your OEM/ODM projects here - https://www.sourceware.co/oemodm.