An ODM product is based on an existing design, developed by the manufacturer. An ODM product can either be the result of the suppliers own R&D, or a (legal or illegal) replica of another product or brand.
ODM products, which are often called ‘private label products’, can be branded with the buyer’s logo.
This practice has been very common in recent years among Amazon sellers and other eCommerce companies.
It’s easy to get mistaken by product listings in various supplier directories, and assume that the suppliers actually ‘have’ all these products.
First of all, factories ‘make to order’ even when it comes to ODM products. They don’t have stock waiting for buyers.
Second, ‘product listings’ can fall within any of the following three categories:
a. Customer products: These designs (and the tooling) may be owned by existing customers. The product is only shown to demonstrate what they have made in the past, but the supplier may not have a fixed spec sheet, or even the design drawings for the product.
b. Demonstration products / fake products: Some suppliers upload images of products that they never actually manufactured. Hence, the buyer must pay for the tooling, in which case it is questionable if the product can even be classified as an ODM product.
That said, it can be acceptable, if it is a digital design created by a supplier to showcase what they can make. However, it is not acceptable if that is not the case.
c. Supplier developed product: Some suppliers invest in product R&D and tooling, but this is only a small part of all listed products on the major supplier directories. If you go down this route, keep in mind that the supplier will have a lot of leverage, as is their IP.
