The allure of passive income — earning money with little to no effort — is undeniable. And selling on Amazon, the online retail giant with a massive global reach, offers opportunities for you to tap into this potential.
But before you envision yourself lounging on a beach with Amazon checks rolling in, let’s be clear: truly passive income is a myth. There’s no “set it and forget it” when it comes to e-commerce. You still need to invest time and resources into product research, marketing strategies, and customer service to establish an income stream. Over time, however, that income can become more passive and require less effort on your part to maintain.
In this article, we’ll explore how to make passive income on Amazon in 2024, and provide you with overall Amazon expansion strategies for your business.
Amazon associates program
The first way to generate passive income on Amazon is by becoming an Amazon affiliate via its Associates program. This program lets you take advantage of the massive selection of Amazon products and earn commissions by recommending them to your audience. But why does it work?
Why the Amazon Associates program is appealing
- Customers trust Amazon, so when you recommend products through your affiliate link, you’re piggybacking on that trust, making them more likely to purchase while you get a cut.
- By building an audience around a specific niche, you can become a trusted source of information. This makes your audience more likely to take your product recommendations seriously.
How to get started with the Amazon Associates program
The Amazon Associates affiliate marketing program is free and open to everyone. All you need to do is head to the Amazon Associates website and create an account. Then, choose a niche that you can specialize in and which resonates with your audience. This could be anything from fitness to pet care to the latest tech gadgets. The key is to find a category you’re passionate about and can create valuable content for.
After your account approval, you’ll receive access to tools for generating unique affiliate links for any product on Amazon. You can then strategically place these links within your content, like blog posts, social media captions, or video descriptions. Whenever someone clicks on your affiliate link and makes a qualifying purchase within a specific timeframe (usually 24 hours), you earn a commission on that sale. The commission rate varies depending on the product category, but can range from 1% to 10%.
Spencer Haws, founder of NichePursuits.com, launched a new website that started making about $3000/month through the Amazon affiliate program. Pretty good, right? He achieved this in just one year with 134 articles published.
Amazon FBA
FBA (Fulfillment by Amazon) is a service that Amazon offers sellers who want to sell their physical products through the platform. Here, you source and/or manufacture your own products and send your inventory to Amazon fulfillment centers. So when a customer orders your product, Amazon picks, packs, and ships it to the customer.
In essence, Amazon is doing most of the heavy lifting like warehousing and shipping, so that you can focus on the other important aspects of your business. Is Amazon FBA worth it? Let’s see below.
Why FBA is appealing
- FBA allows you to outsource the entire fulfillment process, freeing up your time and resources to focus on product development, marketing, and business growth.
- As your business grows, FBA’s infrastructure scales with you. No need to worry about managing your own warehouse or hiring additional staff.
- Fast and reliable shipping, coupled with Amazon’s exceptional customer service, can lead to increased customer satisfaction and potentially higher sales. In his second year of selling on Amazon, YouTube host Chris Hubby made over $300,000 in sales, with $100,000 of that being profit from his first product. He credits Amazon’s fast delivery (via Prime) and built-in customers with high buying intent as the major reasons for his FBA success.
How to get started with FBA
To make passive income with FBA, you must first conduct product research. This is important as it helps you source products with high demand and low competition. Tools like Glimpse or Helium 10 can be helpful for product research.
Next, find a reputable supplier to manufacture your product at a competitive price. Consider factors like product quality, minimum order quantities, and shipping costs.
Sign up for a seller account on Amazon and familiarize yourself with their fees and policies. There are two account options: Individual ($0.99/item sold) and Professional ($39.99/month). Choose the option that best suits your business needs.
Package your products according to Amazon’s FBA guidelines and send them to a designated Amazon fulfillment center. Then, upload high-quality images, craft compelling product descriptions, and set competitive pricing to attract buyers.
Try PickFu’s DIY consumer research platform to test how compelling your product listing is via instant polls and surveys. You can tap into the platform’s built-in, vetted consumer panel and segment them based on your target audience. Use it to quickly test and improve product ideas, designs, images, and more. You’ll also get written feedback with every poll, giving you the reasoning behind respondents’ choices.
For example, here’s a Click Test a PickFu customer conducted to see how their image and listing stack up against the competition in Amazon SERP:
Selected responses include the following:
- “I do not like white/clear storage containers because they look cheap and stand out too much. The black storage boxes will fit our home design better and seem like a more premium option than the generic white/clear boxes. The price is a little high, but still not as outrageous as some of the others.”
- “Even though number 6 was a limited time deal and was cheaper than the image I clicked on, I didn’t choose number 6 because it only had 6 reviews with an average rating of 4 stars. I liked that I could see the front of the box open, but that limited amount of reviews and only a 4 star average rating were enough to make me want to choose another option.”
Learn more about PickFu for Amazon sellers to see how top brands drive conversions and sales with the easy-to-use platform.
Kindle Direct Publishing
Maybe you’ve harbored a secret desire to see your name on a book cover. If so, you should consider Amazon Kindle Direct Publishing (KDP) as a passive income stream. It allows you to self-publish eBooks and audiobooks and sell them directly on Amazon, reaching a global audience and earning royalties on every sale.
Why KDP is appealing
- Unlike traditional publishing, Amazon KDP requires minimal upfront investment. You also control the publishing process, from editing and formatting to setting your price and cover design.
- You get to tap into Amazon’s massive customer base, making your book available to millions of potential readers worldwide. You can also offer your book in various formats like eBook and audiobook to cater to different reader preferences.
- You can choose between a 70% or 35% royalty option through KDP. Both options have their pros and cons.
How to get started with KDP
This is a given, but the first thing to do is to write your book. After writing:
- Use a professional editor to polish the book and ensure it’s as perfect as can be.
- Get someone to design a catchy cover to attract more readers (or go the DIY route).
- Remember to follow KDP’s guidelines when editing and formatting your book.
Set up your KDP account, upload your manuscript and other details, and then promote your book. Optimize your KDP for success by including keywords in your title, subtitle, and book description to improve discoverability. You can also enroll in KDP Select to make more money.
If you’re unsure about anything, use PickFu to test.
Take first-time author Sean Rosensteel for instance. He was finding it difficult to make decisions while creating and launching his book. So, he tested different titles, subtitles, and covers to find the option that appealed to his audience. He was even able to reach his target readers with PickFu.
The end result? His book became a #1 bestseller in five Amazon categories. According to Sean, this success was because of the unbiased feedback he received.
Amazon Handmade
There’s something for everyone on Amazon. If you’re an artisan or crafter, you can share your gorgeous, handcrafted work with the world and potentially earn a sustainable income via Amazon Handmade.
Why Amazon Handmade is appealing
- You can reach a community of Amazon shoppers specifically looking for handcrafted and artisanal products.
- You benefit from Amazon’s established reputation for trust and security, giving potential customers confidence in your products.
- Amazon Handmade streamlines the selling process, allowing you to focus on creating beautiful products. They handle payment processing, customer service inquiries, and order fulfillment (optional).
How to get started with Amazon Handmade
Complete the application process on Amazon Handmade, ensuring your products meet their quality and handmade criteria. Once Amazon has accepted you, design a captivating storefront that reflects your brand and entices customers to explore your handcrafted items. Research similar products to determine a competitive price point that factors in material costs, production time, and your desired profit margin.
Finally, market your shop. Don’t rely solely on Amazon’s organic traffic. Engage in additional marketing efforts like social media promotion, influencer marketing, or craft fair participation to reach a wider audience.
With marketing, TalkShop grew his Amazon pet product handmade store to become the top store in that category in less than a year. He only had two listings on his Amazon store, yet its growth surpassed his top one per cent Etsy shop. That shows the power of marketing.
Amazon Merch on Demand
Do you have a knack for designing witty slogans, eye-catching graphics, or unique artwork? Merch by Amazon (AKA Amazon Merch on Demand) allows you to turn your creativity into passive income. Basically, you’ll create and upload your designs for t-shirts, hoodies, phone cases, tote bags, etc., and you earn royalties on every product sold with your design.
Why Amazon Merch on Demand is appealing
- There are no upfront costs to sign up and upload your designs. This makes it suitable for aspiring designers or those with limited capital.
- Amazon will print-on-demand your uploaded designs on various products and sizes, allowing you to scale your income potential without additional effort.
- While you do have to create and update designs regularly, ideally, your designs should generate royalties with minimal ongoing maintenance after uploading them. As of 2021, Sharon Tseung had made $30,000 and was still making money from designs she uploaded in late 2017/2018. This is as close to full passive income as you can get.
How to get started with Amazon Merch on Demand
The process is straightforward. Create an account, upload your designs (ensure they are high-resolution and meet the technical specifications), choose the products you want them printed on, and set your price. Amazon will take care of the printing, packaging, and shipping.
Dropshipping
Picture this: a customer orders a phone case from your Amazon store. You receive the order notification, but you never actually touch the product. Instead, your dropshipping supplier receives your order details, packages the phone case, and ships it directly to the customer. Basically, you’re acting as the middleman, managing the online store and customer service while the supplier handles fulfillment.
Why dropshipping is appealing
- There’s no need to invest in a large inventory upfront. You only pay the supplier when a customer makes a purchase. This makes dropshipping attractive for beginners with limited capital.
- The beauty of dropshipping lies in the sheer amount of products you can offer. That’s because you’re not limited by storage space and don’t have to worry about physical stock. Tim Kock is a good example. He shares how he sold different products ranging from fun sunglasses (made almost $9000 in a month) to watches (made over $6000 in less than eight weeks) to fidget spinners.
- This model allows you to scale your e-commerce business up or down quickly based on demand. Since there’s no physical inventory management, you can easily add new products or adjust your offerings.
How to get started with dropshipping on Amazon
Before you jump into dropshipping, go through Amazon’s guidelines and confirm the products you’re interested in are not restricted. Then, look for suppliers who offer good products, competitive pricing, and fast shipping times, ideally with experience fulfilling orders for Amazon.
Get creative with your product descriptions, but don’t use the supplier’s descriptions verbatim. Learn what your audience thinks about your descriptions and title with PickFu like this user:
And this user:
The second option is the winner, because of reasons like the following:
- “I think that B is the most important. if it is a mess to read, then it is not even worth my time to read it. That is why I said that the formatting is the most important.”
- “B is key, I really need to be able to get the concept of the product in a few quick glances, I’d rather spend more time reading the reviews. Option C is just a little less important because if there is too much in the title it makes me suspicious. Item A is not as important in detail.”
Private label
More than half (54%) of Amazon sellers use the private label business model, according to Jungle Scout’s 2023 State of the Amazon Seller report. That’s because it’s a very lucrative revenue stream. Private label on Amazon allows you to establish your own brand by selling unique products manufactured by a third-party supplier. While it requires more upfront effort than other methods, you can build a long-term, sustainable business with it.
Why private label is appealing
- Unlike dropshipping, where margins can be thin, private label allows you to control your pricing strategy and potentially achieve higher profit margins. Megan Loftin achieves a 30% profit margin on her new private label business, which is a great deal.
- You build brand equity and customer loyalty over time, potentially allowing you to command premium prices and potentially establish a loyal customer base.
- Working directly with a manufacturer gives you more control over product quality, ensuring it aligns with your brand standards.
How to get started with private label
Carry out market research to identify a profitable product niche. Consider factors like market size, competition level, and product margins. Then, find a reputable manufacturer in China (you can use Alibaba) or elsewhere who can make your product according to your specifications and quality standards.
Develop a unique brand name, logo, and product packaging that resonates with your target audience. After that, list your product on Amazon Seller Central, choose a fulfillment method (Fulfillment by Merchant or Fulfillment by Amazon), and launch.
Amazon Influencer Program
If you have a decent number of followers on social media, the Amazon Influencer Program just might be for you. It allows you to monetize your social media following and passion for products by recommending them to your audience through your personalized URL. When your followers click your link and make a qualifying purchase, you earn a commission on the sale.
Why the Amazon Influencer Program is appealing:
- Suppose you’ve already built a loyal following on social media platforms like YouTube, Instagram, or even selling on TikTok. In that case, you can convert that audience into a potential customer base for Amazon products. Case in point: Thomas Smith with 13k subscribers and about two million views per year on YouTube, makes $8000 per month as an Amazon influencer.
- You can promote products through any content format of your choice.
- Once approved, you’ll have your customizable Amazon storefront full of products you can recommend.
How to get started with Amazon Influencer Program
Check the Amazon Influencer Program website and review the eligibility requirements to see if you meet them. If you do, complete the application process and wait for approval. Once you have approval, create your customized storefront to curate your favorite products and collections.
Use Amazon’s tools to generate unique affiliate links for any product on Amazon. Include these links authentically within your social media content. Whenever someone clicks on your affiliate link and completes a qualifying purchase within a specific timeframe (usually 24 hours), you earn a commission on that sale.
Best practices to keep in mind
Focus on value
Regardless of your chosen method, focus on delivering quality products that customers will appreciate. Don’t scrimp on this!
Prioritize excellent customer service
Respond to inquiries promptly, address issues professionally, and strive to exceed customer expectations. Positive product reviews are gold on Amazon and can significantly boost your success.
Stay compliant
Amazon has strict policies for sellers, affiliates, and influencers. Carefully read and understand their guidelines to avoid account suspension. You should also make sure to stay updated on industry trends, Amazon policy changes, and competitor activity.
Be patient and persistent
Building a successful income stream on Amazon takes time and effort. Don’t get discouraged by initial setbacks. Use Amazon seller tools and analytics to track your sales performance, identify areas for improvement, and adapt your strategies.
Market your Amazon business
Simply listing your product isn’t enough. Focus on SEO and weave relevant keywords throughout your product titles, descriptions, and external content. Research what customers search for and target those terms to improve your organic ranking on Amazon.
Test everything
Test everything from product ideas, logos, descriptions, headlines and even startup ideas. These elements are important and help grab the customer’s attention.
Yes Bar saw a 12% jump in organic traffic (an increase of $3,390 in revenue) in just two weeks – because they optimized a single image using PickFu data.
Here are some pre-built PickFu poll templates to help you get started: Amazon page review, Amazon product variant test, amazon image stack optimization and Amazon main image optimization.
Ready to make Amazon passive income?
Amazon offers so many ways to generate income potentially. Whether you’re a creative writer with a story to share, a skilled artisan with unique handcrafted goods, or a budding entrepreneur with an eye for private label opportunities, Amazon has a platform for you.
Building a successful Amazon income stream takes dedication and effort. However, with the right approach, focus, and constant improvement, you can achieve financial freedom from Amazon with less effort than traditional businesses.
Use PickFu to gather valuable customer feedback before launching. By incorporating insights from real consumers, you can increase your chances of success from the very beginning.
FAQs
Can I make passive income with Amazon?
Yes, Amazon offers ways to generate income that can be somewhat passive. Income source options like Kindle direct publishing or Merch by Amazon can bring in royalties with less daily work, but some upfront effort and ongoing marketing are still required. You can decide whether to treat it as a side hustle or a full-time job.
How to make passive income on Amazon without selling physical products?
If you don’t want to sell physical products, you can still make money online by writing and publishing ebooks with Kindle direct publishing, earning royalties on each download. Or you can join the Amazon Associates program (for affiliate marketing) or influencer program, recommending products and earning commissions for purchases made through your Amazon affiliate links.
Which affiliate marketing platforms should you consider?
Choosing the right affiliate platform depends on your niche and audience. For established e-commerce giants, the Amazon Associates program is a classic with a large product selection. However, many folks have been looking at other marketplaces for selling their products and joining affiliate programs, such as Amazon vs. Temu. While Temu offers competitive commissions, it’s not the same selling strategy as Amazon FBA, so we recommend doing your research to find the best option for your business or brands.
