As a product manufacturer, you may be aware that there are two ideal business models called ODM and OEM. One stands for Original Design Manufacturer and the other is Original Equipment Manufacturer.
Understanding Both OEM & ODM Concepts
Equipment manufacturers offer customized or tailored products that match a client’s exact specifications. And Design manufacturers make their own products and offer them to clients on lease with a white label. Clients who hire products from original design manufacturers do not have to invest in creating or building their very own custom brands.
Explaining Original Design Manufacturers Line of Work in Detail
Original design manufacturers have a different set of work that separates them from original equipment manufacturers. They have to create product designs in-house and then offer to lease those products to other businesses or clients to sell them.
ODMs are considered by companies to bring out an idea to the customers quickly and efficiently with minimum R& D cost involved. The products are from the original design manufacturers altered slightly in some ways to suit business brands who wish to sell them. This type of manufacturing is also called white-label manufacturing.
Only some manufacturers operate as white-label manufacturers. Others try to offer a tailored product service to their clients. These clients may be bursting with ideas but lack in resources to actually design the products.
Let us discuss an example:
- A client has a wondrous idea for new sports shoes
- He does not have the resources to design the shoes on his own
- He can approach an original design manufacturer to pitch the new business idea
- If his idea is accepted, the design manufacturer will manufacture it
- The product will be then sold with a private label
- However, the IP rights may remain with the original design manufacturer
What the ODM actually does?
- Involves in research and development of the product
- Does product testing
- Does the product manufacturing
- Offers the product as a white or private label
Explaining White Label and Private Label Products
White Label Products
A white label and a private label, both terms are technically different. As a manufacturer, you can be offering white-label goods or products that retailers can buy from you to be sold under their brand name. Such products designed and produced by you come under a white label, wherein you control the IP. One or more retailers may buy the same product from you, but customization is restricted to branding only. You are mainly manufacturing a complete product but with a blank label.
Private Label Products
As a manufacturer, if you are giving private label products, it is almost similar to white label products with a slight difference. Private-label products are more exclusive. When you deal in a contract that involves private label manufacturing with a retailer or a client, you are providing a product, especially to that client who can re-sell the product with more rights to greater customization.
One can secure a white or private label product from an original design manufacturer. Such a type of manufacturer is responsible for the complete product manufacturing and most of the development legwork. He also retains 90% of the IP rights as it is originally owned by him.
You may approach the wholesale marketplace platform Alibaba to find buyers wanting to purchase large quantities of products at cheap or competitive rates. Retailers can negotiate directly with reputed odm manufacturers.