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OEM is often the word that comes to mind when one thinks about producing their own cosmetic products.
In this article, we will be explaining details regarding cosmetics ODM and its difference with OEM. In the end, we will also be introducing the 3 points we think are important when choosing a cosmetics ODM partner in Japan.
Definition of Cosmetics ODM
ODM stands for &#;Original Design Manufacturer&#;. ODM is an abbreviation for Original Design Manufacturing. Cosmetics ODM is a manufacturing method in which an ODM company plans, designs, develops, and manufactures cosmetic products under the brand of the buyer.
This enables the buyer to pick an off-the-shelf cosmetic product that is ready to go without any planning or know-how.
There are also ODM companies whose support extends to marketing and logistics.
Difference Between Cosmetics ODM and OEM
Let&#;s take a look into the differences between cosmetics ODM and OEM.
In short, an ODM is a company that designs and manufactures a product. In the cosmetic sector, a lot of companies use this term as a &#;we do everything for you&#; statement. However, it actually means that the ODM company rebrands existing products from its catalog for other companies to market.
You probably come across a lot of products that look the same except for the brand print on Amazon. That means they are products coming out of the same ODM.
OEM, on the other hand, is when the manufacturing company designs a product originally for you or produces a product that was designed by you.
Pros of Cosmetics ODM
We think there are 3 key benefits of using cosmetics ODM.
No need for know-how
As the seller will be re-branding an off-the-shelf product of the manufacturer, they will not have to think of a concept or plan the product.
This is useful for people who want to launch a product without having to do the necessary research and obtain the know-how.
Much shorter lead time
Developing an original product from scratch requires an R&D process which can take up to months. This is not limited to formulation but also the packaging materials and design as well.
When it is an ODM product, none of this will be necessary and the product will be ready to order and delivered in a much shorter span compared to an OEM product.
Lower MOQ
Making an original OEM product requires a certain quantity. This can be 500 or 3,000 depending on the product.
However, ODM products are often in stock and can be delivered in a few days.
Even if the manufacturer does not have it in stock, they will still manufacture a certain amount of products and provide the required quantity from their inventory.
Cons of Cosmetics ODM
There are also downsides of cosmetics ODM which makes it not for everyone.
Lack of Originality
As these are off-the-shelf products, there will be no originality to the product. For companies that aim to differentiate their products from others in the market, cosmetics ODM products will not be a viable option.
Inflexible Packaging and Design
In the case of an OEM product, the buyer has the freedom to choose from thousands of different containers and packages.
However, for cosmetics ODM products, this is different. Buyers will be limited to the options that the manufacturer has in their inventory, in most cases.
One way to work around this is, using an off-the-shelf formulation with original packaging.
Of course, this will bring the MOQ quite a bit up since the containers will be required to be procured.
3 Key Points When Choosing Your Cosmetics ODM Partner in Japan
In this section, we will be explaining the 3 key points we think you should keep in mind when choosing your cosmetics ODM partner.
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Do they have a wide range of products?
At least in Japan, it is difficult to run into ODM-only companies. It is mostly OEM companies that also offer a set of ODM products.
Some companies will only have 1-2 products while others have dozens. Working with a company that offers a wide range of products will be more practical in the long term when you want to add new products to your existing catalog.
How much flexibility do they offer?
Cosmetics ODM products are off-the-shelf products that are often preferred for their speed and practicality. By nature, this comes at the cost of flexibility, which is inevitable.
However, the extent of this also varies from manufacturer to manufacturer. Some companies may be able to offer minor changes to the formulation and a few different options on the packaging materials.
What is their MOQ policy?
One of the reasons why many people prefer ODM over OEM is the minimum order quantity.
If the cosmetics ODM company has the product in their inventory, they can swap the label very easily. Some companies may do this from as little as 20-30 products while others may require 100 or more.
Also, there are companies that do not hold stock and require OEM-like quantities also.
Conclusion
In this article, we explained cosmetics ODM with its pros and cons while comparing it to cosmetics OEM.
Even though we mainly specialize in OEM -as can be seen in our company name- we are also experienced with cosmetics ODM.
We will appreciate any inquiry from your end regarding cosmetics ODM and OEM via the button below.
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Cosmetics Business asks: What is the difference between OEM & ODM and examines what exactly each one entails
The terms ODM and OEM are well-known and often heard: OEM is short for original equipment manufacturing, and ODM for original design manufacturing.
However, as sometimes happens with frequently-used expressions, the differences between them can become slightly blurred. Indeed, some commentators don&#;t actually distinguish between them.
A recent report from Adroit Market Research, for example, stated that the global cosmetics OEM/ODM market is expected to reach US$77.22bn by , growing at a CAGR of 5.3%.
OEM products tend to refer to those designed and manufactured to a particular company&#;s own specifications. These products can be licensed to another company to be manufactured; or they could be manufactured by the OEM company, who then sells them to another company that is responsible for their distribution.
This second description is where confusion can arise as it gets quite close to how some people term ODM, whereby an ODM company is responsible for producing a product as per another company&#;s specifications.
Meanwhile, another description of ODM likens it more to private labelling, meaning that a company selects an already existing product, makes a few changes and sells it under its own brand name.
This is effectively a shortcut to market that saves on major investment in research and development in creating a new product from scratch.
Nevertheless, for the personal care and cosmetics sector, any differences in interpretation of OEM and ODM should not cloud one of the key underlying messages.
Namely, that in a highly competitive industry, a collaborative approach is very often the best way to get a product quickly to market, helping to keep brands relevant, and protect, maintain and grow market share.
Therefore, whether a company has a new product idea that it would like to develop further or a proven product with which it needs help in manufacturing, or if a business simply wants to sell personal care products under its own name, there are plenty of specialist operations who will be able to help.
For personal care applications, outsourcing partners have the experience and production capabilities necessary to turn a concept into a finished product, and can provide specific services across the development and manufacturing process &#; everything from new product formulation to sourcing, procurement, packing and logistics.
The support provided can also be much more than simply the physical production of products, extending to wider advice and guidance, for example helping to ensure the necessary product compliance, labelling and legislation requirements are met.
Outsourcing companies also have the ability to handle the shorter production runs often associated with initial launch volumes, niche or temporary product lines and promotional packs.
In a highly competitive industry, a collaborative approach is very often the best way to get a product quickly to market
An outsourcing partnership lowers the cost of production by providing companies with comprehensive facilities that can meet these requirements without the need for additional internal investment.
It also significantly reduces the complexity of operations for a company, enabling considerations such as extra staff requirements, space constraints and managing production schedules to accommodate increased workloads or new production requirements to be offloaded to an external expert.
Brand owners are then able to concentrate their energies and resources on their core business.
Perhaps the main challenge of the question &#;what is ODM and OEM?&#;, for personal care applications, is that they are terms usually more closely associated with engineering products, notably for markets such as automotive and computer software.
Therefore, when seeking a solution to their development or manufacturing requirements, beauty companies would be better to avoid searching under these specific terms, and instead focus on the level of expertise and support they are seeking and then look for suppliers who can match these requirements.
This should then deliver the partnership approach that supports the delivery of many of today&#;s personal care products. A good starting point for any initial enquiry is the search facility and accredited membership on the BCMPA website: bcmpa.org.uk.
If you are looking for more details, kindly visit OEM ODM Cosmetics.