How To Make Passive Income On Amazon in 2024? 7 Smart Ideas

How to Make Passive Income on Amazon?

Generate Amazon passive income by selling items through the FBA or Merchant system. Your possible strategies may include dropshipping, retail arbitrage, private label, wholesale, and selling your goods. Alternatively, you can invest in the platform’s stock or promote other merchants’ products.

The platform provides many ways for its users to earn money. You need to think of which Amazon business method will work best for you.

As soon as you decide on the method, spare some time thinking about how to bring it to life. For instance, if you wish to sell your products on Fulfillment by Amazon, check what items sell well. It might take some time, but it is worth doing. 

Then, your first stage is to decide whether you wish to work with FBM or FBA. After that, which method will you use to sell goods (e.g., wholesale, private label, etc.)? Otherwise, would you instead opt for selling other people’s items with the Amazon associates system? Next, let’s delve into the methods a bit deeper. 

Fulfillment by Amazon (FBA)

To start with, FBA is a solution that allows sellers to benefit from the platform’s warehouses. Just ship the inventory to AMZ, and the marketplace will send it to your client when the unit sells.

The FBA solution helps you get fairly passive earnings because you should only concentrate on finding goods to sell. You do not need to worry about fulfilling orders and shipping your merchandise daily to shoppers.

Practically, all you need to do is source your goods. Then, you tell AMZ what items you want to sell, and the platform informs you where to deliver your products. The marketplace will supply you with shipping labels if you let the representatives know how many packages you need.

Box all the goods up, take them to the post, and you are all set. The platform will get, pack, store, and deliver your products when the right time comes. Easy, isn’t it? 

Fulfillment by Merchant (FBM)

This solution allows sellers to move their products to Amazon, but they remain responsible for fulfilling the goods themselves. Merchants do not get access to the AMZ warehouse or additional great features that the marketplace provides.

You may imagine the FBM as selling on other platforms like eBay. When a client buys your product, and the order comes in, you have so long to deliver the item.

Hence, you will need to think about where to keep all your merchandise. Unfortunately, your products won’t sell almost as fast because the marketplace prefers FBA merchants. However, fewer commissions are applied, so your profit margin is more significant.

Retail arbitrage

Retail arbitrage entails sourcing goods at retail shops with some discount. You may stumble on deeply discounted goods and then move them on the marketplace for some profit. Usually, you’re checking clearance goods and can sometimes locate regularly priced products to flip.

The disadvantage of this model is that it might be very tedious to find good deals. Besides, some brands can report you for counterfeit or intellectual property claims. The marketplace would request a buy order to deny such claims, and your grocery receipt won’t work.

Dropshipping

It helps AMZ users to get a substantial amount of goods in an extremely short time frame. They do not even have to touch such goods to make profits. With dropshipping, sellers are the middlemen.

A simple example of dropshipping is sourcing a product at, let’s say, Home Depot that now sells for $10. You might then list that item as FBM on AMZ for $30.

When a visitor purchases that item on the platform, you head to Home Depot and purchase the product. Next, you dispatch that item directly to your clients’ addresses.

Most users like this model because they don’t need to keep a single product. Dropshipping allows you to run the business right from the comfort of your home. Still, you need to check your operations daily, so it is not 100% passive.

The disadvantage of dropshipping is that customers do not like to overpay for goods. If my AMZ purchase arrives at me with a store-branded package, I will know it is bought from this shop. Some clients might be angry that they paid $30 for a thing they might have acquired for $15.

Wholesale retail 

Wholesale means the procedure of getting goods you wish to resell from manufacturers or wholesale suppliers. You get some goods at the wholesale price or with a discount. Then, you may sell the merchandise at its recommended Amazon retail price. 

It might be very fruitful for sellers to move wholesale goods. Imagine sourcing the item that brings you $1,000 per month. The beauty of this model is that you may continue to order the same goods repeatedly.

On the other hand, the disadvantage to wholesale retail is that it may take a long time to spot a wholesaler willing to have business with you. Most wholesale suppliers desire to stay undercover, and others might refuse to deal with you.

Produce and sell your goods

You may also produce and sell your goods on the platform via a Private Label. It’s a very time-consuming and complex business model. However, if done right, you will have complete rights to move this product, limiting your competitors.

For instance, you may find a manufacturer to make merch T-shirts for you. They will produce the goods and dispatch them right to the doorstep. Next, you need to create your product listing on the marketplace for your exceptional product.

With traditional goods, multiple sellers offer the same merchandise, competing for the Buy Box. But if you create an item from scratch, you may be the exclusive merchant of this product.

Amazon Associates

It’s a program that helps users promote goods on the marketplace for a certain commission. You make money if you refer business to AMZ. Thus, you should have some method of advertising products, such as a YouTube channel or personal blog.

For instance, suppose you have a blog on Instagram that focuses on fashion. When talking about trends and the specific item, you may link to specific ASINs on AMZ. If someone uses your links and makes a purchase, you will earn your fee for referring sales. 

Amazon has a commission structure you can use to estimate how much you get on the total amount of a particular sale. If you sell $100 worth of AMZ video games or books, you will make $2.

The disadvantage to the Amazon Associates program is that the platform has and might continue to decrease rates. Without warning, it cut fee rates in half last year. Therefore, users earning $2,000 monthly with Amazon Associates are now making $1,000.

How much you get is entirely up to the marketplace. However, AMZ Associates might be your passive source of revenue. For instance, you make one YouTube video, and it can continue to generate sales time and time again.

Affiliate Marketing

Affiliate marketing is a performance-based earning model similar to the Amazon Associates program. It involves promoting products or services for a commission.

Unlike the Amazon Associates program, affiliate marketing is not exclusive to Amazon and can be used on various platforms. You can sign up for an affiliate network, join programs, and promote products through your unique affiliate link.

The advantage of affiliate marketing is that you have more control over which products or services you want to promote and earn commissions from. However, you will need to put in effort to market the products effectively.

How Can SageMailer Help You Grow on Amazon?

SageMailer Dashboard

SageMailer’s feedback management tool can aid in generating passive feedback on Amazon by automating the process of requesting and managing reviews from customers. By setting up automated email campaigns through Sagemailer, you can systematically reach out to buyers, encourage them to leave feedback or reviews and gather valuable insights.

More positive reviews often lead to increased trust from potential buyers, which can result in higher conversion rates and improved sales. Additionally, positive feedback may improve your product rankings on Amazon, making your listings more visible to customers and further boosting sales.

Moreover, the tool provides a centralized dashboard for monitoring all buyer feedback, star ratings, and reviews. This ensures that no review goes unnoticed, allowing sellers to respond quickly and appropriately. You can export reviews in CSV format to get valuable data that can be analyzed for trends and patterns.

Finally, SageMailer is compatible with all Amazon Seller Centrals, allowing sellers to seamlessly integrate multiple online marketplaces. This means you don’t incur additional costs when adding a new marketplace. It allows you to expand your reach and engage with customers across various Amazon platforms, facilitating global selling.

Is Selling on AMZ a Passive Income?

Working with Amazon FBA is a relatively passive income source. However, you’re still responsible for sourcing goods to send to the platform’s warehouses. Other methods, such as Amazon FBM, require much more time and effort, so we cannot call them so. 

Passive income source is best described as finding methods that need minimal maintenance to continue earning money. FBA requires you to launch your business once, and then it will keep bringing you money. For instance, you found some wholesale vendors where some products can be purchased for $5. AMZ sells 100 of these goods every month at a $12 retail price. If the platform takes $2 in fees, your profit is $5 per sale or $500 monthly.

You need to order more units and ship them to the AMZ fulfillment centers. Altogether, this task may take you two hours to do. Thus, you earn $500 for two hours’ worth of work.

Is It Possible to Get Rich Running a Business on Amazon?

Selling on AMZ is one of the options to get rich if you are aware of what you are doing. Hundreds of users are making their full-time income, if not more, by working in the marketplace. However, you don’t own the company, so you don’t have complete control. Thus, don’t forget to check all the rules and guidelines to avoid your account being suspended. 

Summary: How to Get Passive Income on Amazon?

You may earn a lot of money when running a business on AMZ. As a matter of fact, it can even become life-changing for some entrepreneurs.  

As you can see, passive income is real. It might involve some effort up front, but the reward is worth it. So, what are you waiting for? Start now and give one of these ideas a try.