ODM vs OEM: What are their differences?

Let’s settle the differences

Cherry Mobile and Apple are two smartphone companies. One of them is OEM and the other is ODM, guess which is which?

These two are often confused for one another, and non techies might even think there are minimal differences between the two.

Let’s start by discussing OEM first.

What is OEM?

OEM stands for “Original Equipment Manufacturer”. They design a product based on the buyer’s specifications. For example, iPhones are OEM products because they are designed and developed by Apple Inc, but are manufactured by another company, Foxconn.

OEM companies do not usually make products of their own, instead they are contracts, where another company (like Apple) has assigned them to make their designs into reality. Going back to the iPhone, Apple will show Foxconn how the iPhone should be made, what materials to use, as well as the colours on which the iPhone should have. After this process, Foxconn will mass-produce these phones for sale into the public.

The buyer will expect top-notch, if not perfect, quality for the products an OEM manufactures. There is often a quality-check to see which products satisfy the criteria of a buyer and which products are throwaways.

While commonly seen on electronics, they are also seen on general products like clothing or even menu designs at a restaurant.

What is ODM?

ODMs (Original Design Manufacturer) are companies that have the capability to design, develop and market their products themselves. Usually, when an ODM company makes a product, a buyer would then rebrand them into their own name and sell them for a profit. The buyer can also make minor changes to an already pre-existing product.

Production costs is usually lower in contrast to OEM. That is why first-time buyers prefer this method of production, as they can just put their brand name into the product and sell them for a profit, without having the need to design and develop the product themselves

Companies like Cherry Mobile is what you call ODM. Their products are usually just slight changes to already existing ones. They modify said products to cater to their customers’ needs

The biggest disadvantage an ODM company has is differentiation. Because ODMs manufacturer similar products, buyers would have a harder time in the competition because if the other competing buyer is also an ODM selling the same product, then there would be virtually no difference. Hence, ODM companies usually sell in different countries to avoid confusion and misnomers.

Another disadvantage an ODM has is that a buyer has limited control on what customisations they wanted. ODM companies allow for minor changes, but sometimes for this to happen, a bulk order must be made first.

SOURCES: CNSource, Alibaba