ODM in the Manufacturing Process

Have you ever wondered how to start your own brand company without thinking of any designs yourself? Then knowing what ODM is and using it will help you create your own business.

Being one of the top sourcing companies in China, we help clients find the right manufacturers in the manufacturing industry all the time. So, you’re here to get everything you need to know about ODM.

This article will talk about what ODM is, its importance, advantages, disadvantages, and how it’s different from OEM!

What is ODM?

ODM stands for Original Design Manufacturer. This is a contract manufacturer which a local firm or a foreign company can buy a predetermined design of generic products from. 

In simple terms, they make the products, and retailers rebrand and sell them. 

Multiple clients can buy the same ODM original design and sell them as their own custom branded goods. As these products use lower production costs, they’re a popular choice for many brands like Amazon. Companies that want to stay in the price competition will often choose an ODM product instead of an OEM model. 

We will talk more about OEM manufacturing later on.

Why is ODM important?

ODM manufacturing is important as it allows a buying firm to brand a product with low labor inputs. So, buying from an ODM manufacturer is the fastest way to start and own products, especially if you’re a small business owner. 

I have USED ALIBABA, Made-in-China, and many OTHER SITES to get the ODM manufacturers. It is super easy to find the RIGHT one.

But it’s not only for small businesses. Even major brands are always looking to produce products without having to invest millions. And hiring an original design manufacturing company is the easiest way to save money.

ODM is also used when local ownership laws prohibit direct ownership of foreign assets. This allows local firms to produce for brands in the domestic market or international trade. 

How Does It Work?

ODM manufacturing companies create an ODM model for mass production. Anyone can buy these goods and rebrand them as they like. 

Let’s say ODMs produce goods like phone case models. 

Once these phone cases are for sale, other businesses in the manufacturing world can buy them to distribute them again. These products will have much direct competition. So, brands need product differentiation from each other. They do this by using different packaging and good marketing. 

This is called rebranding, and from this point on, the products are already theirs.

My Tips: Rebranding and REPACKAGING is the key. ALWAYS focus on better packaging and marketing.

Types of ODM manufacturing

White Labeling

White label products are final products that other companies can rebrand and repackage. Buyers can’t request any changes to these goods as in white label products, you get what you see, and that’s it. 

A manufacturing business will mass-produce items already ready to be used for a white-label product. This is the cheapest option for retailers.

But a white label is also the type of product that is very hard to market. 

Example 

For example, do you know those identical car chargers with different brands on Amazon ads? Those are white labels. They are all the same ODM model with the same design, only packaged and marketed differently by various companies.

As a consumer, it’s hard to choose which one you’ll buy with the products looking identical, right? Companies need to have good marketing strategies for these products, as it’s hard to make them stand out in the market. 

Private Labeling

A private label product is one that contract manufacturing companies produce for one retailer only. Manufacturers have goods and manufacture products for one entire company that no one else can buy. There is room for the buyer’s specifications in the private label products. As such, buyers can choose the specs, materials to be used, and everything in the product.

The final product becomes exclusive to the buyer’s brand name on a private label. So, unlike white labeling, retailers have control over the production and price of these products in the market. 

Example

An example is the company of Nike. They’re known for buying pre-made designs, asking for revisions, and rebranding these designs as their own. This is a private label.

Advantages and Disadvantages of ODM 

Advantages: 

1. The main advantage of using an original design is its cheap manufacturing costs. I have grabbed LOWER COSTS. Moreover, I don’t have to source the resources required yourself.
2. ODM manufacturers have the manufacturing capacity to be efficient. 
3. Original design manufacturers take care of the research and development part of the process. 
4. You don’t have to think of a product design that can sell. 
5. You don’t need to be knowledgeable knowledge on how to manufacture a product.

Disadvantages: 

1. You won’t stand out from many direct competitors in white-label goods.
2. You’ll be forced to sell your product cheaper if the competition is high. 
3. It will be hard to have loyal customers. Your product won’t be too unique.
4. It’s hard to have product positioning in the market. 
5. You can’t make improvements on the product yourself.

Difference Between OEM and ODM 

You already know what ODM products are, but what is OEM manufacturing? 

OEM stands for Original Equipment Manufacturing. An OEM manufacturer manufactures products that the customers thought of and designed themselves. It’s completely different from the original design manufacturing ODM. As in making OEM products, customers need to have total creative control. 

An original equipment manufacturer produces products where the client owns the exclusive intellectual property. 

Example: 

An Apple iPhone is an excellent example of this. Although manufacturers build the phones, they don’t own the intellectual property of the iPhones.

Suggested reading: How To Buy Direct From China

FAQs about ODM

What’s Next

ODM means Original Design Manufacturer. If you want a cheap way to start your own brand name, then it’s something that might be perfect for you. Hiring such companies is the easiest method to have branded products under your domain, so definitely check it out if you’re an entrepreneur.  

We’re connected with numerous trusted and proven ODM and OEM companies in Asian countries, most significantly, in China. If you want to be introduced to the best manufacturing companies, then contact us!