It is an industry that processes goods on behalf of customers.
The so-called "OEM" actually involves a kind of cooperation between two parties, one is the client and the other is the OEM. And there are two models of "OEM", one is OEM and the other is ODM. Considering that ordinary netizens may not be familiar with these two concepts, next we will use examples of “making” and “selling” cake businesses around us to explain what OEM and ODM are.
What is OEM?
Suppose you are selling cakes, and the cakes you sell are produced by yourself, and you have registered a patented brand name. When you first started selling cakes, because you were still a novice in this industry, even if your cakes were delicious, your cakes were not well-known enough, so your sales were average. Therefore, you relied on the manufacturing capacity of your store. Make as much as you can sell. But because your cakes are really delicious, you gradually become more and more famous in the industry, and more and more people buy your cakes to eat, so your sales increase sharply. Since the production capacity of your store is only so large for the time being, it is impossible to complete a sudden increase in a large number of production tasks, so what should you do? You can find a cake maker to help you. At this time, you need to tell them clearly what your requirements for these cakes are, ask your colleagues to help you make them according to your requirements, and finally put your own brand on them, and then give them a certain amount of compensation. This is actually a form of OEM.
There is another situation. We all know that cakes need packaging. So although you can make cakes in your own store, but you cannot make packaging, then you can design it yourself first. Or you can directly find a packaging manufacturer to design, and then produce a packaging image that is unique to your own brand. You can also directly use those manufacturers’ inherent packaging styles and directly affix your own brand. You no longer need to create your own packaging. Design or call it redesign. This is another form of OEM.
In summary, the so-called OEM means that Company A is entrusted to produce products for other companies. It does not use Company A's own brand and is not responsible for the sales of these products. It only processes and produces for the entrusting company. Or it can be produced completely according to the design and process requirements of the entrusted company.
What is ODM?
It doesn’t matter if you have never been in the cake business before or you are in the cake business yourself. In other words, it doesn’t matter whether you have the ability to independently make and produce cakes. In short, now you When you see that another company is also in the cake business (regardless of whether it has its own brand) and has designed and manufactured a cake style that is very satisfying to you, you want to buy the production patent for this product from it and then affix it to it. Put your own brand name on the market and sell it. So you can discuss it with him and ask him if he can label this product with your brand, and then how much do you pay him to reach an agreement. A good product may often be liked by many people, so there may be another person B who also likes this cake like you, so he also goes to the store to discuss cooperation like you, and then B will also have the same cake as you. This product may also be sold under B’s own brand. But if this happens, there will be some strong competition for your interests, and because this cake is very easy to sell on the market, you don’t want others to sell this cake at the same time to compete with you, but you want to occupy it alone. What should I do with this product? There is a way, that is, you must pay more money to buy the production patent of this cake, and ask it to no longer produce this cake for other people, but only for you. But the premise is that you must be able to provide enough funds for it to be willing to produce just for you. This is ODM.
There is also another situation, that is, even for an already well-known cake brand, although it can design and manufacture cakes by itself, others can also design and manufacture some cakes that make it very satisfied, so it You can go to D and discuss that you want to buy out the design and manufacturing of this cake, and then sell it under your own brand name. D is not allowed to sell this cake to others or use D's own name to sell it.
In a nutshell, ODM means that company A designs and manufactures several projectors by itself, and then one or several of the models are favored by other companies, so other companies will follow A's lead. The company talks about cooperation and purchases a certain amount or all of the production of this product from Company A. After the transaction, other companies have the right to make some modifications to the products. Company A needs to make certain improvements to these products according to the requirements of the entrusting company, but Likewise, Company A’s brand is not used, and Company A is not responsible for product sales.
The main difference between OEM and ODM?
The concepts of OEM and ODM are easy to confuse, but the main difference between them is still relatively easy to distinguish. It can be said that OEM is more aimed at those projector manufacturers with "private brands". Projector manufacturers with "private brands" have the technology to independently produce projectors, but they may not be able to place orders due to too many orders at once. It is completed in time, or it is a certain component in the projection that they think the OEM manufacturer will do better, or they do not want to open such a production line due to operational model considerations, so these projector manufacturers with "own brands" will look for These OEM manufacturers manufacture for themselves. ODM is more aimed at those new brands in the projection industry. They generally do not have the technology to design and produce projectors by themselves, or they have the technology but not much economic strength. In this case, ODM will be their best option. choose. But ODM is also suitable for those projector manufacturers that already have "own brands". Because they have enough financial strength to buy out the design and production of this product at one time, this eliminates the possibility of projectors that are similar to other brands. Phenomenon. However, "private brand" projector manufacturers can also choose not to buy out a product, but share it with other brands at the same time. This also results in a situation where different brands on the market have similar or identical machines.
The existence and impact of the "OEM operating model":
Netizens who have studied politics or history should know that the "monopoly" phenomenon is extremely detrimental to the development of the entire industry. It is a kind of unfair competition, and the emergence of OEM has broken the monopoly situation very well. For example, for example, in the whole projector industry, only three manufacturers A, B, and C have launched their own brands at the beginning, so these three brands are sold in the market. With a large market and few brands, the competition will naturally not be too fierce, and the price Can also be raised uniformly. But in fact, although there are only these three brands on the market, some other manufacturers actually have the ability to design and manufacture projectors, but they have not launched their own brands due to certain reasons. In this case, if you want to enter the projector industry If the new manufacturers do not have the ability to design and manufacture projectors, they can cooperate with these OEM manufacturers and then sell them under their own brand names. Then there are more new brands, which will naturally break the monopoly of the three manufacturers A, B, and C, thereby allowing the price of projectors to drop significantly. For new brands, the OEM model allows them to save money and manpower in research and development of projection technology, but they can have projectors to sell under their own brand names, which is obviously profitable. For OEM manufacturers, the more new brands there are, the more orders they will receive and the more they will earn, which is obviously profitable. For the three manufacturers A, B, and C, it will obviously bring competition pressure, and the prices will be lowered by new brands. But the more important thing is its impact on consumers. Due to more and more brand competition, new brands and even new brands and some old brands may have the same product, but Due to the difference in the company's operating capital investment, the same product of different brands may have different quotations. Therefore, it is absolutely possible for consumers to buy a product of brand There is a difference of 5,000 yuan, but the machine purchased is the same. But what needs to be understood is that the extra 5,000 yuan earned by the old brand is not actually the pure profit it earns. In fact, it also includes the brand’s service investment and other costs. So which brand is better to buy? You need to compare and consider various factors such as the services of these two brands.