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Off the Shelf (ODM) vs Product Development (OEM): Which One is Best for Your Brand?​

One of the biggest decisions brands face is whether to use off the shelf products or to invest in product development. In this article originally published by Sourci, we will break down the pros and cons of both approaches to help you make an informed decision.

Table of content
What's the Difference?
ODM (Off-the-Shelf Products): Advantages and Disadvantages
OEM (Product Development): Advantages and Disadvantages
Summary
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What's the Difference?

Off the shelf products (ODMs) are ones where your factory already uses set specifications to make the product. In this instance, you have limited customisation options available – usually in the form of adding a logo or changing the colour of a component. They probably also have existing stock ready to sell. Your supplier will usually have a catalogue of off the shelf products you can choose from. 

On the other hand, product development (OEMs) refers to the process of designing, creating, and manufacturing new products. This process typically requires specifications drawn up and tech packs created for your unique product.

Colour customisation is one differentiator of OEM.

ODM (Off-the-Shelf Products): Advantages and Disadvantages

Pros

  • Speed to market: Off the shelf products are readily available, allowing brands to start selling quickly without having to invest time in product development. This means you can begin generating revenue much quicker!
  • Cost-effective: Using off the shelf products is generally less expensive than developing a product from scratch as you’re skipping the development process. Without the need to draw up new specifications, or to invest in tooling and moulding, you can cut down on costs.
  • Proven quality: Your factory is familiar with how to make this product and it has been tested already. You can generally count on it to be reliable and functional, which can help your brand avoid costly mistakes and returns from unhappy customers. 

Cons

  • Limited differentiation: It can be challenging to make an ODM product stand out in a crowd. To use a lamp as an example: although you can make limited changes, you likely won’t be able to change the length, width, shape and material of the product. This lack of customisation can make it difficult to differentiate your product from others on the market. 
  • An ODM product is available for everyone: That means your competitor could be purchasing from the same supplier as you, and your end product could be very similar to theirs. As a result, you’ll likely need to price your products competitively to encourage potential customers to bring their business to you rather than your competitors.

Taking the ODM product route is a viable option with plenty of advantages, but it has drawbacks that are inevitable when dealing with a universally available, pre-designed product. Whether or not off the shelf products are the ideal approach for your brand is dependent on your goals. If you’d like to get to market quickly with a reliable product that needs minimal customisation, ODM could be the right choice for you. 

OEM (Product Development): Advantages and Disadvantages

Pros

  • Unique products: When developing your own product, you can create an innovative new design where you have complete control of its features: in the instance of a lamp, you can adjust the length, width, shape and material as you see fit. This distinguishes your product from the rest of the market and helps you to create products that are tailored to your target market and reflect your brand identity. 
  • Potential to increase profits: There’s potential for higher profits by creating unique products that aren’t readily available on the market. To elaborate: if your lamp has a unique feature that no other lamp on the market has, you can leverage this by charging more than your competitors who are using stock-standard products. 
  • Ability to optimize and improve: When you have your own products, you can always improve and optimize them based on customer feedback and sales data, which can help you increase sales and customer loyalty.

Cons

  • Can be expensive: One major drawback is that it tends to be more expensive than using an off the shelf product. You will typically need to invest in development costs such as tech packs, new specifications, and tooling and moulding, which can be quite costly and can add up quickly. 
  • Lengthy and complex process: Product development is generally a longer process than using an off the shelf product, which can be a problem for businesses that need to get to market quickly. Product development is usually more complex and technical than manufacturing off the shelf products and requires more contact with the supplier, more documentation and as such, usually more back and forth communication. This will draw out your lead times and can make this a heftier process to undertake.
  • Risk: Product development involves a certain level of risk. There is a chance that the final product may not meet the expectations or may not be successful in the market. This is a potential risk with any product that is differentiated to its rival products or any products that are innovative in some way.

The significant advantage of OEMs is that you have complete control over the design of your product. Developing your own products can be a great way to set yourself apart from the competition and build an identity as an innovative brand.   

OEM focuses more on original creation and design.

Summary

The choice between off the shelf products and product development depends on the specific needs and goals of your business. Off the shelf products are a great option if you need to get to market quickly and don’t require a lot of customization beyond adding your logo or changing the colour. However, product development can be a better choice for businesses that are looking to create innovative products that are different to what’s already offered in the market. Ultimately, it’s important to weigh up the pros and cons of each option, and to choose the path that will best serve what you’re trying to achieve and what’s important to your brand’s success.

Sourci helps e-commerce brands, and retailers scale rapidly, build innovatively and grow holistically. Their mission is to provide a value-driven sourcing process to clients and help them connect with world-class manufacturers and suppliers. Sourci is built on the foundation of being fully transparent and providing a safe and stress-free environment for global trade.

Whether you are looking for ODM or OEM products, we have an array of quality choices at hktdc.com Sourcing. Click through below banner to explore:

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