Many people get confused by the terms OEM and ODM when they first encounter skincare contract manufacturing. The costs, time, and effort required for these two models differ greatly, and choosing the wrong path could delay your product launch by three months or more.

What's the difference between OEM and ODM?

OEM (Original Equipment Manufacturer) means contract manufacturing: you provide the complete formula, design, and packaging specifications, and the manufacturer handles production. It's like taking a recipe to a restaurant and asking the chef to follow it exactly. The formula belongs to you, the product specifications are yours, and the manufacturer simply executes the production.

ODM (Original Design Manufacturer) means contract design and manufacturing: the manufacturer provides existing formulas for you to choose from. You select one, adjust the fragrance, color, or packaging, and it's ready for production. It's like ordering from a menu and asking for slight modifications, such as less oil or salt.

The biggest difference lies in formula ownership. With OEM, the formula is yours; with ODM, the formula belongs to the manufacturer. This directly affects flexibility in switching manufacturers and negotiating costs later.

Time difference in practice

Suppose you want to create a hyaluronic acid serum:
OEM process:

• Develop the formula yourself or hire a formulator (1–2 months)
• Submit the formula to the manufacturer for samples (2–3 weeks)
• Test and adjust the formula (1–2 months)
• Stability and microbial testing (1–2 months)
• Mass production (3–4 weeks)

The whole process takes at least 4–6 months.

ODM process:

• Choose a formula from the manufacturer's existing library (1 week)
• Adjust color, fragrance, or viscosity (1–2 weeks)
• Confirm packaging and label design (2–3 weeks)
• Mass production (3–4 weeks)

Shipping can happen in as little as 2–3 months.

When is ODM suitable?

1. First-time entrepreneurs testing the market
If you're unsure whether consumers will buy, it's better to test small batches with ODM than spend heavily on a unique formula. Many Taiwanese e-commerce brands start this way—use ODM to validate sales, then invest in OEM once the brand is stable.

2. Limited budget
Developing a new formula, including raw material tests, stability tests, and efficacy verification, easily exceeds NT$200,000. ODM saves these costs, allowing you to focus on marketing and brand building.

3. Fast product line expansion
If you already have a flagship product and want to quickly launch facial cleansers or body lotions, ODM is cost-effective for supporting products, as consumers demand less uniqueness in these items.

4. Seasonal or limited edition products
For short-term projects like Mid-Autumn Festival or Mother's Day gift sets, ODM's speed is a clear advantage. You wouldn't want to spend six months developing a formula for a product sold only for two months.

5. Lack of cosmetic expertise
If you don't understand ingredients or preservative systems, ODM allows you to rely on the manufacturer's experience. Their formulas are market-validated, stable, and safe.

OEM or ODM? Ask yourself three questions

• “Does this product need a unique selling point?”
  If your brand story relies on an exclusive formula, choose OEM. If design or cost-effectiveness is the focus, ODM is sufficient.
• “How much time do I have?”
  If the launch is less than three months away, ODM is the only option.
• “Will I switch manufacturers in the future?”
  If yes, OEM preserves formula ownership, giving more negotiation flexibility.

About 70% of Taiwanese skincare startups initially choose ODM. The reason is simple: survival comes first. Once the brand is stable, with loyal customers and cash flow, they invest in OEM to develop flagship products.

Don't think ODM is low-end. Many best-selling drugstore products are actually ODM-made. Consumers care about product performance and brand philosophy, not whether it's OEM or ODM.

Want to learn more about choosing skincare contract manufacturing in Taiwan? Contact us directly, and we'll provide recommendations based on your budget, timeline, and product positioning.