Have you heard of OEM and ODM type suppliers? The distinction between the two may be confusing to you, and you may not be able to find a clear definition of them on the Internet. However these two terms are very important in toy wholesale Business and they are very common modes of cooperation.Understanding them is an essential step if you want to start a toy wholesale business
Through this article, you can clearly discern the difference between OEM and ODM, the advantages and disadvantages, and how to choose OEM or ODM services.
1.What is OEM ?
For the wholesale toy business, OEM stands for Original Equipment Manufacturing. This is actually a type of contract or outsourced manufacturing. Its basic meaning is that toy wholesalers do not directly produce products, but use their own key core technologies to design and develop new products, control sales channels, and entrust other manufacturers of similar products to produce specific processing tasks through contract orders. After that, buy out the ordered products at a low price and directly affix their own brand trademarks. This cooperative way of entrusting others to produce is called OEM.
In this case, production plants can design and manufacture products according to specifications and customer preferences. Produce products that meet customer requirements.
Before letting any OEM manufacturer handle your toy product design, you should do a lot of research and understand its development. Due to the specificity of toys, they tend to be more complex and it starts with researching product development, conducting market research, engineering and design uniqueness research, during which you need more information, especially about dimensions.
1. You can fully control and own all intellectual property rights of wholesale toys. A higher bargaining position can be obtained when bargaining with suppliers.
2. Because you have detailed product specifications and related designs for wholesale toys, you can speed up the quotation process and get quotations from suppliers quickly.
1. Due to the important position in the whole supply chain, you may face the dilemma of changing suppliers because you need to rearrange the whole supply chain.
2. Since the sub-supplier is not disclosed, it can be replaced without the buyer. Changes in materials or workmanship can have a serious impact on the product quality of wholesale toys.
3. If your secondary product sales are high, suppliers may want to compete with you.
When starting a toy wholesale business, the following two scenarios are suitable for choosing OEM suppliers
You can provide suppliers with complete wholesale toy product designs, including wholesale toy production related materials, design drawings, product specifications, etc., and even product molds for wholesale toys.
Your company is buying a product from a manufacturer, but the manufacturing company either developed the product itself or acquired the rights to the product from a third party beforehand.
2.What is ODM ?
For the wholesale toy business, it stands for Original Design Manufacturing, which is a contract manufacturing process. it means that after a manufacturer designs a product, it may be seen by other companies in some cases, requiring the latter to produce it under the latter’s brand name, or to slightly modify the design for production. The manufacturers who undertake the design. it is mainly responsible for product development services and other product life cycle services.
In this case, suppliers can help you design new suitable wholesale toy product designs and specifications here. You just need to explain your production concept to them, and they can also provide you with existing product designs, or you can directly choose the product that suits you. You can use your own brand name on the products you want.
1.No need to invest a lot of money, They will be responsible for the whole process of product development in the wholesale toy business, which can save a lot of money.
2.They will be responsible for all the technical resources required in the manufacturing process of the wholesale toy business. This way, you don’t have to have the expertise or resources to design specifications.
1. Wholesale toy suppliers have ownership of product designs and it is difficult to change suppliers.
2. The risk is greater, you need to make sure the supplier is not stealing from other companies, or you may face fines.
3. If your product sales are high, suppliers are likely to compete with you.
4. You may have difficulty negotiating terms in your favor (payment terms, liabilities, etc.)
When starting a toy wholesale business, the following two scenarios are suitable.
Your company brand has multiple sales and marketing channels. However, it does not have the toy wholesale business. research and development capabilities. They can design the product you want according to your concept. You just need to provide your idea.
You have the research and development capabilities for toy wholesale business. But for those wholesale toy products with lower profit, there is no need to invest a lot of time and manpower in design, in this case, it is undoubtedly the best choice, you can choose the right one from the existing products of the supplier and modify.
1. Different concepts
- ODM is the product design plan proposed by the entrusting party, regardless of who completed the overall design, and the entrusting party shall not provide third parties with products that adopt the design.
- OEM products are tailor-made for brand manufacturers. After production, only the brand name can be used, and the manufacturer’s own name cannot be used for production.
2. The difference in intellectual property rights lies in who owns the intellectual property rights of the product. If the entrusting party owns the intellectual property rights of the product, it is OEM, ;and if it is production The overall design carried out by the manufacturer is ODM.
4.Which should I choose
It depends on your needs. Do you have a finished design for manufacturing? If so, OEM is the right partner for you.
If you are considering developing a product or are already in the process, we recommend working with an ODM partner. We believe that involving your manufacturing partners at the beginning of the process is a best practice you should follow.
OEM or ODM supplier
Where can I find
There are three main ways to find manufacturers.
Live trade fairs or wholesale markets
A more convenient and economical way for small businesses and early stage businesses is to find reliable suppliers online. The biggest manufacturing factories you can contact online are Alibaba, Made in China and Global Sources. On these sites, suppliers will provide you with their production details, from which you can choose a suitable supplier according to your needs.
Offline trade fair or wholesale market
You may find it unreliable to find suppliers online. You can also choose to go to the local wholesale market in person to find suitable suppliers. By picking suppliers offline, you can see the products in person, ensuring quality. If you are not in China, you can choose to attend a trade show.
Below is the China Toy Fair Guide for your reference.
Distributors have many resources and information about suppliers or manufacturers to meet customer needs. However, to identify carefully make sure you hire a professional purchasing agent.
A professional purchasing agent can: guide you to choose the right manufacturer, negotiate prices, follow up on production, ensure high or standard quality, test products and arrange shipments.
How to identify suitable
When looking for suppliers, you can consider the following indicators:
1. Whether the quality and price of the product match.
2. Whether good and effective communication can be established with suppliers.
3. Inspect the supplier’s production qualification
5. If a new mold is used, please clarify if it can be retrieved.
Selection and its process in china
You can follow these seven steps:
1Have a design idea or design your product
2. Find a suitable manufacturer in China
3. Calculate the cost of the entire process
4. Make samples before production
5. Choose private label and packaging
6. Start mass production