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What is ODM?
Original Design Manufacturing, also known as private labeling, is a form of contract manufacturing. ODM means a factory will make products for you based on their already-existing product design. These factories typically allow you to make minor modifications to their design like product size, packaging, and branding. As such, you can sell the products under your brand name.
ODM: Advantages and Disadvantages
1. You don’t need to make large upfront investments for R&D and setting up a custom production line. Since the ODM handles the product development process, you can focus more on marketing your products.
2. You will benefit from the skills and experience of the ODM, especially if you have little to no knowledge about manufacturing.
3. You can save a lot of money even if you are purchasing low volumes of products. This is because ODMs usually produce significant quantities to sell in smaller lots.
Despite the many advantages associated with ODM sourcing, there are also a few drawbacks.
1. Since many ODM factories manufacture products according to the same design, it is highly likely that your product appears similar to that of your competitors.
2. You don’t get the protection of intellectual property, so there’s a chance that you find yourself in a contractual disagreement with the ODM.