2021.7.2                

Understanding Cosmetics ODM And How It Differs from OEM

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
  • ・Much shorter lead time
  • ・Lower MOQ

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
  • Inflexible Packaging and Design

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.

  • Do they have a wide range of products?
  • How much flexibility do they offer?
  • What is their MOQ policy?

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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