When people consider making their own beauty products, the term original equipment manufacturer (OEM) often comes to mind.
The following article will go into depth on the topic of cosmetics ODM and how it differs from OEM. Finally, we’ll go over the three criteria we believe are most crucial when selecting a Malaysian cosmetics ODM partner.
Definition of Cosmetics ODM
The definition of ODM is Original Design Manufacturer (ODM). In cosmetics ODM, an ODM firm works with a buyer to plan, create, develop, and produce a cosmetic product using the buyer’s brand. The consumer can select a pre-packaged cosmetic that requires no special preparation or knowledge. In addition, there are ODM firms that offer help with promotion and distribution.
Difference Between Cosmetics ODM and OEM
OEM stands for “Original Equipment Manufacturer,” which indicates that the producer creates the final OEM product according to the needs and preferences of the customer. The client has already provided a sample or formula for the manufacturer to follow and use for mass production. To sum up, the manufacturer’s role is limited to replication and production, and they have no say in the design of the product. The customer is responsible for creating the marketing strategy and packaging for their product.
If you’re an entrepreneur and all you need is a manufacturer to crank out your finished product, then OEM is for you.
When a company is labeled as an “Original Design Manufacturer,” it signifies that they are in charge of developing and producing the product from start to finish. After studying the client’s market, they will develop new formulations, write up marketing proposals, and provide fresh takes on the packaging.
Customers who already know their market and want to design items specifically for that audience benefit most from ODM. The customer grants the producer complete leeway in terms of design and execution.
Pros of Cosmetics ODM
Among the many advantages offered by ODM that cosmetics companies may reap if they incorporate it into their product development processes are the following.
1) Targeted Advertising
If you own a small cosmetics business, you can easily carve out specialized markets by ordering in bulk from major manufacturers and then private labeling your goods to reflect your brand’s aesthetic and your customers’ preferences. They may worry that the profit margins on selling niche cosmetics are too small to justify the investment in mass production. The cosmetic ODM may choose to cater to customers with ingredient sensitivities by developing a makeup range that also includes skincare goods. As your niche marketing grows, you’ll be able to establish a name for your company that clients will think of whenever they need cosmetics, and you’ll gain new customers when they tell their friends about your allergy-friendly offerings.
2. Businesses will benefit from individualized customer care
The primary benefit of ODM for a small cosmetics business is the ability to compete with larger firms that don’t need it by providing individualized service to their clientele. In addition to assisting customers in finding the right products for their skin tones and kinds, a small cosmetic ODM might include usage instructions on the product labels. Because the services provided are tailored to the individual, client loyalty will grow. Customers can be encouraged to provide you with referrals in a simpler manner when you have a little cosmetic ODM. After developing a strong rapport with you, a customer will feel comfortable referring their friends to you so that you may help them get flawless skin all over their bodies.
3. Provide your services at no cost to your customers
Small cosmetic ODM labs can gladly assist anyone in creating their own product line at no cost, so long as the order is placed with them after the line has been made. Since websites and magazines are always looking for the best and latest in the field of cosmetics, new lines of cosmetics have also received distinctive features, such as being made with celebrities or having organic components, which allows them to have free publicity. You can obtain some assistance running your small cosmetics business by hiring college interns, who will also gain essential job experience.
Cons of Cosmetics ODM
Unfortunately, not everyone can benefit from cosmetic ODM due to its drawbacks.
Since these are mass-produced items, they won’t have any special qualities. Cosmetics ODM products are not a good fit for businesses that want to set themselves out from the competition.
2. Poorly Adaptable Packaging and Layout
The buyer of original equipment manufacturer (OEM) goods can select their preferred container or packaging from among thousands of options. However, this is not the case for ODM cosmetics. In most instances, customers will be unable to customize their purchases beyond the manufacturer’s current offerings. You can get around this by substituting a commercially available formulation in its original container. Because of the need to source the containers, this will unavoidably increase the MOQ.
3 Key Points When Choosing Your Cosmetics ODM Partner in Malaysia
Is there a large selection of goods available?
At least in Malaysia, ODM-only businesses are uncommon. Most OEMs also provide a selection of ODM items. While others may have dozens of products, some companies may only have one or two. In the long run, it will be more convenient to work with a company that offers a wide variety of products if you plan on expanding your current product offering.
How much flexibility do they offer?
Off-the-shelf (ODM) items in the cosmetics industry are frequently favored due to their convenience and quickness. Naturally, this limits how adaptable the system can be. However, the level to which this occurs differs from one manufacturer to the next. A select few businesses may be able to provide slightly modified formulations and a range of attractive packaging solutions.
Where can I find out their minimum order quantity requirements?
The lower minimum order quantity that comes with ODM makes it a popular alternative to OEM. The cosmetics ODM firm can easily change the label if they already stock the product. As little as 20 or 30 goods may be sufficient for some businesses, while others may need 100 or more. There are other businesses that don’t keep inventory but need OEM-level numbers.
As was just discussed, the meaning and function of ODM differ from OEM. Companies can get the items they need for their operations by entering partnerships with ODM manufacturers. The benefits of ODM compared to OEM are numerous. The time and money saved may be put towards establishing a solid brand name and expanding its reach, and there are fewer risks involved. These benefits will increase the competitive edge of ODM goods and the manufacturing industry in the years to come.