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What is OEM
What is OEM
04 September 2020
OEM: Why is it Good for Your Business
by Yariv

Are you a wholesale/retail buyer or a category manager of a chain store? Do you always need something new and unique products to offer your customers? Do you want your shop to stand out among competitors?

Well if that’s the case, you’re on the right page because in this blog, I am going to show you a way on how to be able to buy unique and good products at a lower cost and in turn have higher profit.

First of all, what is OEM?

For example, there is a chain store who wants to sell pouches. Their buyer sees a pouch being offered by a certain factory but the buyer wants to make his own design or sentiment written on pouch.

OEM Wallet

Since the product is already existing and the only thing to be modified is the print, the chain store buyer can purchase this item without spending too much on sample development, functionality test, and so on. The buyer will just need to pay the item itself and the new silk screen mold for printing new designs which is not very expensive – around 20-30USD. In contrast, if the buyer needs to create this type of product from scratch, he might pay around 200USD just to produce the same item.

Take this another example:

A chain store wants to sell a plastic Multi Beard Shaping comb – a unique product for his customers.

Multi beard shaping comb

But to have this, he needs to pay a few thousand dollars to the manufacturer to create a new plastic mold for this certain type of product.

Now here comes another manufacturer who already creates this type of product but in different color. Not only the manufacturer can produce this but they can also customize the color and add prints based on the chain store’s preference.

OEM Comb

Because the manufacturer already has this type of product, the chain store buyer doesn’t need to pay thousands of dollars just to create a new plastic mold. Instead, the wholesale buyer can just pay for the item plus few costs on the customization.

In other words, an OEM or Original Equipment Manufacturer makes products that can be customized depending on the buyers own design preference and branding which in turn the buyers sell to their consumers as their own.

There are a lot of things to be considered in the retail industry. You need to constantly study your market, think about what new products you can offer, source new suppliers, and so on. Getting off some items in your plate help you focus more on other important things that will help you generate more sales.

So here are some more benefits of an OEM:

1. Save Time

When creating new products, you have to go through a lot of process – from research & development, to designing even until production. It will take too much time for you to design and develop a whole new product concept until you can start selling.

With OEM, you can just check out their available products and incorporate your own brand and design preference, and then you’re good to sell.

2. Less Cost

Saving time also means saving cost. You don’t have to pay too much on product development and to mention, the expensive additional cost such as new plastic molds for unique plastic items. And with lesser cost means higher profit margin for your business. 

3. Designs are on Trend

Some manufacturers who offers OEM are always in constant development. They usually have their own design team who studies and researches about the latest product trends and designs. With this, you can be sure to offer your customers products that are on trend that will help boost your sales.

4. Convenience

Working with one manufacturer who can do everything you want with a particular product is definitely a good catch. If the manufacturer already has good products and can also customize it, you don’t have to go the hard way searching for other suppliers that would cater your needs.

5. Add Value to Your Customers

With OEM, you can add value to your customers by selling unique, new and good products that they would really like. You will also be able to fulfill their demands on time. In return, your customers will also like your store because of the these added value you give them.

To sum it up, OEM offers solutions to wholesale buyers and chain store category managers who want keep up with their customers by selling good and unique products in a simple way.