The Complete Guide to Making Passive Income on Amazon

Posted 2 years ago by Max Komonov

When most people hear the听term 聯passive income,聰 they likely think of听savvy investors buying stocks or听real estate. It听is听true that these types of听investments can lead to听huge financial gains without requiring any听physical labor. But, these are not the听only ways to听make passive income.

You don鈥檛 need to听take a听risk buying stocks, or听have enough extra capital to听invest in听real estate in听order to听earn passive income. There is听a听much more accessible, low-risk way to听earn passive income. Not only that, but it鈥檚 a听method you鈥檙e probably already very familiar with.

Amazon sellers can earn passive income by听setting up听an听online store on听the听platform. There is听work involved in听setting up听an听Amazon store initially. But, once the听store is听up, you don鈥檛 need to听be听very active in听order to听make money. How does this Amazon passive income stream work, you might ask? The answer is听dropshipping, or, more specifically, Fulfillment By听Amazon (FBA).

The FBA arrangement allows sellers to听enlist Amazon鈥檚 vast network to听fulfill customer orders. Want to听learn more? Here鈥檚 everything you need to听know about how to听make passive income on听Amazon.

Understanding Amazon Passive Income

For tax purposes, defines passive income as听income from activities in听which one does not 聯materially participate.聰 In听practice, most people think of听passive income as听income that does not require any听work at听all. This latter definition can be听a听bit misleading at听times, as听there is听usually some work required to听get started.

When making passive income selling on听Amazon, that work involves setting up听a听store and听deciding what to听sell. This process can involve fairly extensive research, as听well as听setting up听contacts with Amazon or听other suppliers.

However, once your Amazon store is听set up, it听can start generating passive income for听you fairly quickly. Your level of听involvement with the听store can be听as听low (or high) as听you want. If听you sell the听right products, at听the听right price, your Amazon store can make a听profit without requiring you to听lift a听finger.

Amazon FBA passive income

The simplest way to听generate some Amazon store passive income is听to听use . Fulfillment by听Amazon takes a听lot of听the听heavy lifting out of听the听hands of听the听seller. To听illustrate how much easier this system makes it, let鈥檚 imagine trying to听set up听an听Amazon store without it.

Without a听system like Amazon FBA passive income in听place, all sellers on听Amazon would need storage for听their entire inventory. When purchasing products wholesale, as听most sellers do, this would likely be听an听impossible task. If听you鈥檙e trying to听make passive income, you probably are working from your own home. It鈥檚 a听safe bet that you don鈥檛 have an听industrial-sized warehouse in听your backyard. Without this, you have no听way of听keeping your inventory safe and听secure while you wait to听ship it听out.

Speaking of听shipping, it听can get both expensive and听complicated. Being able to听pay for听shipping is听challenging enough as听it听is. The logistics involved can also turn into a听full-time job on听their own. Forget 聯passive income聰 in听this case.

Suffice to听say, affording storage and听shipping are ordinarily two of听the听biggest obstacles to听starting an听online business. But Fulfillment by听Amazon removes both of听these tasks from the听equation.

Amazon already has an听established network of听warehouses (Fulfillment Centers) and听its growing fleet of听delivery vehicles. FBA sellers can agree to听use these services to听fulfill all purchases made on听their Amazon store. This means that as听long as听you have inventory and听a听functioning Amazon store, you can easily generate passive income.

Fulfillment by听Amazon pricing

If听you鈥檙e going to听sell on听Amazon, you should also be听aware of听the听fees involved. Amazon makes it听easy for听sellers to听join their marketplace. Part of听this seller-friendly environment includes their relatively low fees.

Amazon has two basic seller payment plans. The Individual Plan charges $0.99听per item sold in听your store. The Professional Plan, meanwhile, charges a听flat monthly fee of听$39.99. Which plan you should use depends on听your sales volume. A听low volume of听sales is听probably better suited for听the听Individual Plan. However, if听you sell more than 40听items per month, you鈥檙e better off with the听Professional Plan.

There are also for听sellers who use Fulfillment By听Amazon. These fees vary based on听the听type of听item and听when they are being sold. Be听sure to听study these fees carefully when making your store, as听it听can make a听difference.

However, as听long as听you understand how to听price products appropriately, you should always make a听profit.

Advantages of听Setting Up听an听Amazon Store For Passive Income

Now that you know how to听make passive income on听Amazon, you may be听wondering why you should do听it. It鈥檚 true that an听Amazon store may not offer as听much of听a听return as听some other passive revenue streams. But selling on听Amazon is听still more than worth it听if听your goal is听to听make money without much work. Here are some of听the听benefits of听selling on听Amazon for听passive income.

Easy to听get started

The first advantage of听using Amazon for听passive income is听that just about anyone can do听it. The same can鈥檛 be听said for听investing in听real estate, for听example. To听get started as听an听Amazon seller, all you need is听an听internet connection and听a听willingness to听do听it.

The financial investment is听fairly minimal, and听is听quickly negated once you start selling. True, you should do听some market research before getting started. But the听level of听work is听fairly minimal considering how quickly you can start earning passive income.

Low risk

Selling on听Amazon also comes with much lower risk than passive income streams from stocks and听investments. When you sell on听Amazon, your expenses are low and听fairly easy to听recover. Most of听your fees are dependent on听the听items being shipped. As听long as听you sell at听an听appropriate markup, these fees are covered by听your revenue.

You might also invest in听paid advertisements to听increase sales. This is听a听minor risk that most businesses are comfortable taking because it听can be听effective.

Scalable

础苍听under-appreciated advantage of听Amazon passive income is听how easy it听is听to听scale up. Once you start making some money through your Amazon store, it鈥檚 relatively easy to听expand your inventory.

Using FBA eliminates ordinary obstacles that come with scaling your business. There is听no听need to听add storage space, hire new workers, or听increase manufacturing. You simply add new listings to听your online storefront, and听Amazon can continue fulfilling customer orders for听those items.

Huge market

You likely already know this, but Amazon is听the听largest online retailer in听the听world, with customers. When you sell on听Amazon, you not only have access to听the听ecommerce giant鈥檚 network of听warehouses and听shipping resources.

You also have access to听the听enormous international consumer market. Amazon is听usually the听first place many people go听when they are shopping online. If听you have a听spot in听that marketplace, you can sell to听just about anyone.

Amazon Passive Income Ideas

Want to听start selling on听Amazon, but don鈥檛 know what to听sell? As听you know by听now, choosing the听right product to听sell is听one of听the听keys to听success on听Amazon. The key is听to听identify items that are in听high demand with relatively low competition. Good profit margins can also be听an听advantage, so听be听sure to听pay attention to听fulfillment fees here as听well.

Here are some amazon passive income ideas to听help you get started on听figuring out what to听sell.

Clothing

Clothing can potentially check all of听the听boxes when it听comes to听profitable passive income products. Clothing is听lightweight, thus making it听affordable to听ship. It鈥檚 also in听very high demand, meaning there will always be听a听market for听it.

But clothing can also be听niche enough that you can easily find a听unique market for听yourself. You might specialize in听selling one particular type or听style of听clothes, rather than trying to听sell everything. This can give you a听large, but concentrated, customer base for听your Amazon store.

Cosmetics &听personal care

Another staple of听FBA and听dropshipping businesses are cosmetic products. These, again, are lightweight products that everybody needs. And there is听enough variety within cosmetics and听personal care that most stores can find a听niche for听themselves.

Home decor &听office supplies

Yet another essential everyday item that will always be听in听high demand. Some items in听this category are on听the听bulkier side, thus making them more costly to听ship. But home decor, like bedding, curtains, and听picture frames are relatively easy to听ship, and听are always needed. This, again, is听also a听category with enough variety to听find a听niche market and听avoid having too much competition.

黑料门 is听here to听offer sustainable ecommerce solutions for听those ready to听start a听successful online business. Build your business, run a听successful online store, and听generate passive income with ease.

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About The Author

Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.

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