Oem vs Odm: The Differences Explained

person product design

When it comes to electronic product development and manufacturing, you’ll likely need a helping hand— especially if the plan is to have your products go through mass production.

You’ve probably heard about OEM and ODM before and pretty soon, these two terms are going to dominate some of the most crucial decisions that you have to make in terms of production. Understanding OEM and ODM, their differences and their respective uses will help you in taking the first few and most important steps as a budding entrepreneur.

Original Design Manufacturing (ODM)

Also known as private labeling, ODM involves choosing a product design from an already existing design catalog. Often, a few changes here and there will be carried out and the importer can go ahead and have the finished product sold using their own brand logo and name. Among the many changes that will be carried out during the production process includes product bundling, packaging, branding colors, as well as certain adjustments in terms of functionality and components.

Just like the name suggests, ODM is focused considerably on the product’s design. This means that the focus will be on the technical design work towards getting a product turned from concept into an actual reality. If you are dealing with ODM manufacturers, they will not only complete the design, they will also help towards product manufacturing and then get your brand name placed on the products, transforming you into the goods’ exclusive owner. It’s also common for ODMs to do a side business of creating their own products, known as “white labels” that brands can then use and put their logos on.

ODM Advantages

What’s notable with ODM is the fact that they make it possible for importers to avoid having to spend millions on research and development. Just like what the wise always say, anything that isn’t broken doesn’t need fixing. With the product expense considerably slashed, importers are able to focus on their marketing efforts instead.

ODM Disadvantages

One downside to these types of products is that there may be others out there that would look almost the same as yours. This means standing out from the competition can be harder to do. As a result, there is a steeper competition when price is considered, which could mean less profit in the process.

Original Equipment Manufacturing (OEM)

These are products that a company has fully designed. It is then licensed out so a manufacturer can produce en mass. Since the company is responsible for the product design, the resulting output is usually easier to differentiate from other similar products on the market. It’s common for most brand-name appliances and electronics to be classified as OEM like the ones on X-Pest. The same is true for garments that are custom-designed that have their own brand logos as well.

Advantages of OEM

The best part about OEM is that the product’s creative design control is retained by the designer. With ODMs, the products are restricted to a design that has been predetermined. OEMs, meanwhile, are made in accordance to your specifications—with the limitation being your budget and your imagination.

Disadvantages of OEM

One downside of OEM is that it can be too resource-intensive. It’s common for designers to invest millions in research alone and in the development of the product design. In addition, OEM designers have to carefully guard their designs to make sure that their intellectual property isn’t  going to be copied, stolen and replicated by other companies for a much lower price.