If you have an idea for a new product and want to find a trustworthy manufacturer to team up with and sell your products, you might have heard about OEM and ODM manufacturing. Before reaching out to a manufacturer, it’s essential to know the main differences between these two types of business services. Alternatively, if you’re considering providing manufacturing services globally, you’ll need to choose which of these two services you want to offer.
In this article, we’ll explain what OEM and ODM manufacturing mean, when you might require an OEM manufacturer, and what ODMs can provide that OEMs cannot.
Whether you’re an international factory aiming to showcase your services online or a company looking to broaden your product range with manufacturing assistance, let’s begin with the basics.
What is OEM Manufacturing?
OEM stands for “original equipment manufacturer,” which means a manufacturer that provides goods or manpower to bring a product to market. OEMs typically make components used in products and offer a service known as OEM services.
If you’re a company planning to launch a new product, you might need OEM manufacturing services, which you can find on B2B platforms like Alibaba.com. Established companies with products already on the market often have a team dedicated to product development, including designers, testers, and marketers who have spent months or years creating new product lines.
Since these companies have the original idea, designs, manufacturing processes, and branding ready, they just need a manufacturing facility and workforce to produce the items and meet demand. In such cases, OEM manufacturing is the suitable service.
If you’re a manufacturer lacking the capability to design, create, test, and brand products, you should offer OEM manufacturing and provide basic manufacturing services to assist businesses in mass-producing products.
Here’s an example of how OEM manufacturing works:
A luxury sportswear company has designed a new line of sneakers, complete with branding, market research, and product testing. They require each pair of sneakers to have a memory-foam sole.
The sportswear company finds a supplier on Alibaba.com offering OEM services and contacts them.
The OEM, experienced in working with fashion clients, can mass-produce the luxury footwear range with memory-foam soles.
The sportswear company provides the designs, manufacturing requirements, branding, logos, and packaging specifications, if needed.
What does “OEM service offered” mean on Alibaba.com?
If you’re a contract manufacturer providing OEM services, you can highlight your OEM capabilities on your digital store page on Alibaba.com. Additionally, you can display your professional certifications and third-party approvals to increase your credibility with potential buyers.
What is ODM Manufacturing?
Now that we understand OEM manufacturing, let’s delve into the realm of ODM and how it differs.
But first, what does ODM stand for? ODM stands for “original design manufacturer.” Knowing this term is crucial for entrepreneurs aiming to efficiently expand their businesses.
An ODM, or “original design manufacturer,” is a company equipped to independently design, develop, manufacture, and sell products. Unlike OEM, which is commonly seen as a service, ODM refers to the product itself. The scope of ODM extends beyond manufacturing to encompass design, engineering, and production processes. It’s important to note that the definition of ODM may vary slightly based on industry-specific nuances and practices.
Products created by an ODM are often rebranded by buyers as private label products and sold for profit. Unlike OEM, which relies on client specifications and product designs, ODMs often take the lead in designing and developing products either independently or in collaboration with clients.
Many businesses opt for ODM services to tap into manufacturers’ expertise while focusing on their core strengths. This becomes the preferred manufacturing service if you have a great idea but haven’t yet designed, developed, tested, or branded it.
If you’re a manufacturer with employees or teams skilled in product design, development, and testing, you can position yourself as an ODM. Dependable ODM services enable businesses to maintain competitiveness in rapidly evolving industries.
Here’s an example illustrating how ODM manufacturing functions:
A client operating in the education sector identifies a market gap. Armed with market knowledge, they approach an ODM with the idea of creating a school bag featuring compartments that cool drinks, food, and snacks while keeping other sections completely waterproof and stain-proof.
The ODM receives details about the new school bag concept and arranges a meeting with the client to delve deeper into the product’s demand.
During the meeting, the client elaborates on why the product is needed and outlines preferences regarding color schemes and styles appealing to young students.
Drawing from this market insight, the ODM develops a school bag incorporating cooling, waterproof, and stain-proof pockets. Their design team focuses on the bag’s style, fabrics, and specifications.
Now, the ODM can sell the product to the client, who may choose to rebrand it, or sell directly to consumers.