What do ODM and OEM mean, and what is the difference between them?

By justchinait
September 29, 2020

OEM: Original equipment manufacturer

OEM transaction relationship can be regarded as a kind of sales and purchase relationship. From the buyer’s point of view, it is outsourced production and provided to Market behavior
From the perspective of the supplier, it is a transaction form in which the counterparty’s brand products are produced according to the buyer’s requirements and the counterparty is responsible for sales;
The sales channels and brand advantages of the buyer and the manufacturing advantages of the supplier constitute the overall competitive advantage of the product, bringing practical benefits to both parties.
OEM is commonly referred to as “OEM” or “OEM”. In our country, due to factors such as differences in understanding and regional cultural differences, OEM is also called “commissioned production”, “commissioned processing”, “brand-name manufacturing”, and production outsourcing. Wait.

ODM: Original design manufacturer

ODM means that after a certain manufacturer designs a certain product, in some cases, it may be taken by other companies, requiring the latter’s brand name to be used for production or to slightly modify the design to production. This allows other manufacturers to reduce their own development time. Manufacturers that undertake design and manufacturing business are called ODM manufacturers, and the products they produce are ODM products. The product plan designed by the manufacturer can be provided to the brand owner in a buyout or non-buyout manner.

The above statement is more professional. Here is an example to make it easier for you to understand.

OBM: A design, A production, A brand, A sales == the factory designs and produces and sells itself

ODM: B design, B production, A brand, A sales == Commonly known as “OEM”, it is the product of the factory, the brand of others

OEM: A design, B production, A brand, A sales == OEM, OEM production, other people’s technology and brand, the factory only produces.

Both OEM and ODM are cooperation models between the brand and the manufacturer in product design and manufacturing.

The main difference between the two lies in

1. Different cooperation methods

The way of OEM cooperation is that brand producers use their key core technologies to design and develop new products and control sales channels. The entrusted manufacturer only manufactures in accordance with the technical information and requirements of the brand.

The ODM cooperation method is as follows: The purchaser entrusts the manufacturer to provide all services from R&D, design to production, and post-maintenance.

2. Different copyright ownership

OEM products are actually produced by processing companies other than the brand in accordance with the requirements of the brand and are released under the brand’s trademark and name. Technical property rights such as design belong to the brand.

The external trademark and name of ODM products belong to the brand. The design property rights belong to the commissioned manufacturer.

In layman’s terms, OEM means with other people’s technology and brand, the factory is only responsible for production. ODM means the factory’s products are affixed to other people’s brands.

The main meaning of OEM and ODM is the brand of your products.

Branding is a kind of marketing strategy used by the sellers or manufacturers to impress its potential clients or improve the user experience of the current clients. Once the brands occupied the clients’ mind they won’t choose other brands unless the brands have negative issues happened to them. For example, when we want to buy sports shoes, we firstly look at the latest Nike or Addidas shoes, when we want to buy a phone, we may first think about the iPhone. That’s the brand charming. It is the same for dropshipping business, the private label branding has many advantages.

Firstly it helps you distinguish your stores from others. Each store has its brand attributes, how you label the store, how you marketing your store to distinguish similar stores are very important for the long time operation. If you branding your store well, it could help you stand out from the competition.

Secondly, private label branding could help you improve user experience and trust. When you start to label the products, you will have a higher standard on the product quality than clients, once the quality and price beyond their expectation, they will have a better user experience and trust the brand then have secondary purchase and user loyalty.

Thirdly, private label branding drives huge free traffics to the store. Once the clients have user loyalty, When you apply coupons during the festival vacation time and other marketing campaigns, they will happy to share with friends on social platforms for huge free traffics.

Lastly, brands usually mean a higher profit margin. Think about Nike, Addidas shoes with other sports shoes without famous brands, compare iPhone with other phones. It is the same online. Once you private label the products and find its precise positioning, it usually has higher profits than others.


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