Who doesn’t want to make money while they sleep? Luckily, it is possible with passive income. And Amazon offers a lot of opportunities for making passive income without lifting a finger.
If done right, you can earn passive income just by selling products on Amazon. But guess what? This is not the only method of making passive income in the marketplace.
In this post, I will discuss how you can make passive income on Amazon. I have listed multiple ways, so you don’t run out of ideas.
So, let’s get started.
What Is Passive Income?
In short, when an individual generates an income with little to almost no effort, it is called passive income. Basically, such earnings are derived from an automated source that doesn’t require too much attention from individuals.
Revenue from stock dividends, real estate, rental properties, royalties, and interest payments are a few examples of passive income. There are a lot of eCommerce options available on the internet too, and Amazon marketplace is one of those.
Can You Earn Passive Income On Amazon?
As I told you before, Amazon’s marketplace is a wonderful place to start a business that allows you to generate income with almost no effort. In fact, most of the selling processes are automated, which means it is ideally a platform for individuals who want to earn passive income.
However, if you are planning to sell physical products on Amazon, you have to go through a setup process. And it will require some effort from the seller—whether it is finding a product or listing them on your Amazon store for sale. Once your store is set up and you have an inventory to sell, you can start preparing to send your inventory to FBA fulfillment centers. It will make sure you don’t have to worry about storing or delivering your products to your customers.
Ways To Make Passive Income On Amazon
Amazon offers a range of opportunities if you want to make passive income. Here are some best possible ways for individuals.
1. Amazon FBA
FBA (Fulfillment by Amazon) is Amazon’s in-house fulfillment facility that allows sellers to sell physical products without managing an inventory by themselves. With Amazon FBA, sellers get access to the world’s largest logistics and distribution network that help them deliver their products to their customers.
If you want to make your Amazon business truly passive, choose FBA as your fulfillment method. After choosing this method, send your FBA inventory to fulfillment centers or warehouses. They will take care of the whole order fulfillment process without bothering you with anything. However, when your inventory is low on stocks, you have to replenish it within time to keep the process running as it is.
Some sellers choose the FBA program because they can’t afford to deliver products alone, while others choose the program for convenience. Many sellers go for FBM (Fulfillment by Merchant) method as they want to provide services to their customers on their terms. However, the FBM method demands so much manual work. This is why you can’t particularly count FBM as passive income.
2. Selling eBooks On Kindle Direct Publishing
Are you an author or writer by profession? If so, then I have good news for them. Amazon has its own online self-publishing house, Kindle Direct Publishing (KDP). It allows you to publish your eBooks for free. There are no upfront charges for KDP, but Amazon will deduct the selling fees as they do for FBA product selling.
Selling eBooks on KDP is just like blogging. You can create readable content related to many niches, or you can hire a ghostwriter or freelancer to do the job for you. Then you can convert the content into a PDF or HTML format and upload it to KDP without any additional requirements.
You get paid royalties when a customer buys or rents any of your eBooks on Amazon. With KDP, you can earn upto 70% royalties of your eBook’s listed price, which is incredibly higher than other online publishing houses. Unlike other platforms, you take 100% ownership of your books as well.
3. Amazon Dropshipping
Dropshipping on Amazon is one of the most convenient methods to earn passive income. This is a fulfillment model that allows sellers to outsource products from a third-party supplier. These suppliers not only source products for you but also deliver them to your customers’ locations.
The only trouble in this business model is finding a reliable supplier that offers products at great prices and has a history of delivering products on time. If you can’t find one manually, you can look for dropshipping companies or suppliers’ directories. SaleHoo, AliExpress, Worldwide Brands, and Doba are a few popular names that most dropshipping merchants like to go with.
If you are doubtful about a supplier’s products or their quality, you can order samples to inspect the quality. And if you don’t want the supplier to deliver the product, order products in bulk and use the FBA program to ensure on-time delivery.
4. Amazon Affiliate Program
If you own a website or post blogs on a daily basis, Amazon offers you many affiliate programs that can be a viable option for passive income. The program name is Amazon Associates, and you can join for free of cost. There are a number of affiliate offers in this program that a marketer or bloggers choose according to their niche.
There are millions of products, programs, and services available on Amazon. After joining Amazon Associates, you can get affiliate links to these products or services. And then, you can promote Amazon products in your posts, articles, and blogs by inserting these links. You get a fixed commission whenever a customer makes a purchase using those links.
Remember, commissions for products and services are different from each other. Don’t fall for a high-commissioned product unless your website or business relates to it. Otherwise, your audience will think you are tricking them with an unrelated product for a cut.
5. Merch On Demand
Merch on Demand is Amazon’s in-house print-on-demand service for artists, designers, and creative minds. It is just like the dropshipping business model, but instead of contacting third-party suppliers, you can let Amazon take care of product manufacturing and shipping.
Sellers can upload their designs on various white-label products using Merch on Demand service, and Amazon’s advanced printing facilities will manufacture products with your design. Meanwhile, you can list those products in your Amazon store.
When a customer places an order in your store, Amazon prints your design and delivers it to your customer’s doorstep. In return, you earn royalties upto 37% for every sale, which is not bad for just uploading designs and artwork. This method requires almost no effort to earn passive income.
6. Sell Digital Products
Selling digital products on Amazon is another great method for generating passive income. In fact, this business method allows you to earn with high-profit margins, and you also don’t have to maintain an inventory. You can choose anything that can be digitally accessible, including music, software, online games, digital services, and online course bundles.
The best part about this method is that you can sell without limitations as long as it is digital. It is like a private-label business because Amazon offers 100% ownership of your products. And no one can sell a copy or replica of your digital product without your permission.
Another benefit of selling digital products is that you can sell them internationally. You can tap into its global audience in multiple marketplaces with an Amazon seller account. You can choose your preferred marketplace(s) and sell unlimitedly.
7. Arbitrage
Arbitrage (or flipping products) is a legal business model on Amazon that sellers use to run their Amazon stores. In this model, sellers take advantage of different prices of a product from multiple marketplaces. They purchase items at a cheaper rate from one marketplace and sell them at higher rates in another marketplace(s).
Sellers can do arbitrage business via two methods: online and retail. In retail arbitrage, interested sellers can source products from retail and convenience stores at a discounted price and sell on Amazon at a higher price. In retail arbitrage, you can check the product’s quality to ensure minimum returns from customers.
In online arbitrage, sellers can source discounted products from local online stores. The best part about online arbitrage is that you can get thousands of store and product options without stepping your foot outside. The profit margin of online arbitrage is slightly higher than retail one, but there’s no guarantee of product quality. This is why online arbitrage is not as successful as retail arbitrage.
Is Selling on Amazon a Passive Income?
The answer to this question can be both yes and no. If you are using the FBA service as your order fulfillment, you don’t have to give complete attention to your business, as Amazon takes care of all the heavy work. However, you are still responsible for product sourcing and sending your inventory to Amazon warehouses or fulfillment centers. You can use Amazon-partnered freight carriers like Rapid Express Freight to replenish your inventory when needed.
Other methods as Amazon FBM or Amazon Direct Fulfillment, require more time and effort, so you can’t count these methods as passive income. If you want to sell on Amazon to make passive income, go for the FBA method. You will only need minimal maintenance to earn money with FBA.
For instance, you send an inventory of 100 products, and each unit costs you $5. Now, Amazon sells all your products at $13. Suppose the selling and shipping fees are $3. That means you made $5 per unit, which is equal to $500. After each month (or when it is needed), all you have to do is replenish more products to the fulfillment center, which only takes a couple of hours. So this time is worth spending if you want to make passive income.
Related Read:
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- How To Sell On Shopify
- How To Sell On Amazon Handmade
Conclusion: How To Make Passive Income On Amazon (2023)
Making passive income is still a dream of many. Not everyone can afford to buy rental properties or invest in real estate to make passive income. Luckily, Amazon offers a lot of opportunities for making passive income without investing too much money. In fact, programs like Merch on Demand and Amazon Affiliates don’t require investing a penny. You can start making money just by joining the program, which is absolutely free.
Earning passive income isn’t as easy as it seems. Selecting ventures and products is the most important aspect of earning passive income. Every passive income source has its own skill and certain business requirement. For example, if you are planning to join Amazon Affiliates, you must have a running website or blog with an established audience. Otherwise, it won’t be easy to convince new visitors to purchase from your website.
Regardless of the Amazon program for passive income, make sure to read all the guidelines and business requirements. This is because you want to make passive income, not waste your time managing or switching ventures. I hope this guide helped with your purpose well. If you have any other questions, let us know in the comments.
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