7 Ways To Make Passive Income on Amazon | An Unfortunate Disadvantage of the Platform

July 14, 2023

Do you know all the ways to make passive income on Amazon? As one of the world’s richest and most innovative companies, Amazon offers many opportunities for you to make extra money online like Amazon FBA, dropshipping, and Amazon Associates. However, not all the opportunities allow you to generate passive income. In this article, we discuss the 7 best ways to make passive income with Amazon and outline how to set up your online business so you can work minimal hours. With a few of these strategies, you could soon be making $20,000/month or more! We also talk about an unfortunate disadvantage of the platform you may not expect..

Besides Amazon, starting your own local lead generation business is another passive income idea to consider. Local lead generation uses local SEO to rank business websites on Google that generate leads for small businesses. Each website can generate thousands of dollars in passive income per month and you can run as many websites as you want because they require little maintenance. So many people want passive income, and both local lead generation and Amazon offer it. 

What is passive income?

Passive income is making money without actively working. Traditional passive income ideas include things like rental income from real estate, dividends from stocks, or interest payments from bonds. Many people want passive income because it allows financial freedom, so you can spend your time as you please instead of actively working. Amazon is often recommended as one of the best places to make money online, leading many to wonder can you make passive income on Amazon?

How do you generate passive income on Amazon? 

You generate passive income on Amazon by using tools, strategies, and hiring support to help run your Amazon business. Some Amazon passive income opportunities, like Amazon Merch or Amazon Associates, are naturally easier for long-term passive income. Others, like dropshipping or arbitrage, require more particular setups to make passive income. No Amazon business will generate passive income in the beginning, unless you buy it that way. You need to put in the work to turn any of the below opportunities into passive income machines.

1. Amazon FBA

Amazon FBA is a service that lets you outsource order fulfillment of your Ecommerce store to Amazon. In fact, FBA actually stands for “Fulfillment by Amazon”. When you run your business through the FBA program, Amazon handles:

  • Inventory storage in the Amazon fulfillment center
  • Picking and packing
  • Shipping to your customer
  • Customer service 

  • Returns processing

Selling on Amazon through the FBA program enhances your opportunities on the platform. Amazon FBA allows you to guarantee your customers two-day shipping, so your products are preferred by high value Amazon Prime members. Amazon Prime members spend more than double non-Prime members, averaging $1,400/year in Amazon products according to The Ascent. Furthermore, Amazon’s advanced logistics systems and network offer a cost effective solution for Ecommerce sellers. 

However, unless you buy an Amazon FBA business outright, you won’t be able to make passive income right away. Realistically, you can start making passive income from your FBA business after about two years. You can not start Amazon FBA with no money because you need to buy products in bulk and pay Amazon FBA fees. Amazon FBA sellers most often sell using the private label product or wholesale method, which both have high upfront costs.

First, you need to become profitable, which can take between 6 and 12 months with these FBA business models. Then, you need to reinvest profits to focus on growing your business to expand your product line. Finally, once your business is established, you can join the 43% of sellers that, according to JungleScout, spend only 10 hours or less to manage their Amazon FBA business. From there, you can outsource those 10 hours to a person or team. 

How to set up an Amazon FBA business to make passive income?

  1. 1
    Do product research to find lower competition selling opportunities
  2. 2
    Establish long term relationships with reputable suppliers
  3. 3
    Aim for at least five profitable products in your product catalog to diversify operations and diminish risk
  4. 4
    Automate as much of your business as possible using tools like QuickBooks for accounting or JungleScout for product research and competitor analysis
  5. 5
    Hire a VA or FBA company to help manage your business, so you only have to step in when necessary

Can you make a living off Amazon FBA?

Yes, you can make a living off Amazon FBA. The average American household spends $5,111/month, according to First Republic. 12% of Amazon FBA sellers make between $25,000 and $100,000/month in revenue. Considering a typical profit margin of 20%, those successful sellers make between $5,000 and $20,000/month in profit. Therefore, although it’s not typical, you can make enough money just on Amazon to live in America. Ben Alistor, a successful online entrepreneur, earns a passive income through Amazon FBA. 

2. Amazon dropshipping

Dropshipping is how to sell on Amazon without buying product. With Amazon dropshipping, you list products on Amazon and then just send your supplier your customer’s shipping details when someone buys the product. The product never touches your or Amazons hands. It goes directly from your supplier to the customer. You can make $1,000 to $50,000 on Amazon through dropshipping, according to Dropshipper.io. Many people get started in dropshipping because it is a low-risk business model that only requires a few hundred bucks or a credit card to get started doing. It even is a good passive income idea for stay at home moms because of its low-risk business model.

However, the nature of the dropshipping business model usually requires you to be very active in the business. You need to:

  • Regularly cross check prices between the Amazon marketplace and your dropship supplier to ensure profitability
  • Research and add new product ideas to your Amazon product catalog in seller central
  • Send customer shipping details to supplier for every order and track shipment to verify successful delivery

How to automate an Amazon dropshipping business to make passive income?

  • Use “Automate Pricing” in Amazon seller central to always match the buy box so you get sales and set a minimum price to ensure you’re always profitable
  • Leverage a stock management tool like Sku Grid to monitor stock levels and to automatically update your stock in Amazon
  • Use an auto-ordering tool like PriceYak to automatically place dropshipping orders and add tracking details to Amazon
  • Hire a VA to manage daily operations of the business like product research and adding additional products

3. Amazon arbitrage

Retail arbitrage is how to create passive income on Amazon by reselling products on Amazon for a profit. You find products for cheaper in other retailers, like for example on sale at Walmart, and list them on Amazon for the market price to earn the difference of the sale. There is no minimum inventory to sell on Amazon. Therefore, you can make money with Amazon arbitrage even if you only buy one unit of the product. This is one of the best passive income Amazon ideas if you have low start up capital because it doesn’t take much money to get started. You can make $2,000 or more in profit per month with Amazon arbitrage after around nine months, according to OA Beans. 

However, if you want to start making passive income on Amazon from retail arbitrage, you need to set up your business the right way. Unlike normal Amazon FBA and dropshipping, which handle shipping for you, you need to employ the help of a third-party logistics service if you want to make this a passive income venture. You can still use Amazon FBA, but you need another service to prepare the items before they are sent to the Amazon fulfillment center. Furthermore, you have to rely on online arbitrage product sources because in-person sourcing from retailers like Home Depot is a time-consuming process. 

You can also compare Amazon retail arbitrage vs private label as private label can be a potential source of passive income when done right.

How to set up an Amazon arbitrage business to make passive income? 

  1. 1
    Use an online marketplace price checker like BrickSeek to find deals and cross check the price on Amazon
  2. 2
    Install a market analysis tool like Buy Bot Pro to help your business make quick and effective buying decisions and to ensure you are eligible to sell an item on Amazon
  3. 3
    Partner with an Amazon prep and ship service like Systemise Fulfilment, so you have somewhere to send your items to be prepared for Amazon FBA standards
  4. 4
    Hire and train an Amazon virtual assistant to manage daily operations of the business from a freelance website like Fiverr 

4. Amazon Associates

Amazon Associates is Amazon affiliate marketing. You can become an affiliate to make passive income by signing up for the program and promoting products of other Amazon sellers. Being an Amazon associate is how to make money on Amazon without selling anything yourself. You can create a passive income stream just by marketing. But, is Amazon affiliate marketing profitable? You can make between $100 and $25,000/month in affiliate income with Amazon Associates, depending on how much traffic you get, according to WP Manage Ninja.

The best way to make passive income through the Amazon Associate program is to create an affiliate website. With an affiliate website, you choose a niche to write blog articles around and put your affiliate link from the Amazon Associate program in the content. You should aim to post between 3 to 5 blog posts/week if you want to grow your organic traffic and make more money, according to Wordable.io. 

Is Amazon affiliate program worth it? Yes, it can be worth it, especially when you already have a high-performing website that drives significant traffic. Once you have many blog posts already published on the internet and traffic visiting your site, you earn passive income. However, your site should still publish consistent content to rank well in the search engine. Even if you no longer want to write articles yourself, you can hire some copywriters to do the work for you and pay them out of the profits from the business.

5. Amazon Affiliate Bounties

Amazon Affiliate Bounties is how to make passive income online by promoting Amazon services specifically. Amazon Affiliate Bounties is similar to Amazon Associate. However, instead of promoting seller products, you promote Amazon services like:

  • Amazon Prime
  • Amazon Video
  • Baby Registry
  • Audible

  • Wedding Registry

  • Music Unlimited

  • Amazon Family

Just like Amazon Associate, an Amazon influencer can promote for the Amazon Affiliate Bounty program through multiple channels like blogs, social media, email, or even YouTube. Once the content is published, you can make passive income every time someone uses your affiliate link to sign up for Amazon services. 

6. Amazon KDP

Amazon KDP is how to make passive income with no money. KDP is Amazon Kindle Direct Publishing, where you can publish your book on Amazon for free and split the profits with Amazon. With Amazon KDP, you can publish an eBook for Amazon Kindle, paperback, or hardcover books and promote to Amazon’s global audience. As the author, you receive a 35% to 70% royalty on each book you sell through the program. An author can make anywhere from $150 to $20,000/month with Kindle Direct Publishing, according to ZonGuru.

What do you need to publish a book for Amazon KDP?

  • Book title
  • Price
  • Author's name
  • Book cover
  • Book text
  • Marketing optimized book description
  • Categories and keywords for Amazon

What are low content books?

Low content books on Amazon are books that have little to no content on the interior pages like notebooks, planners, and journals. You don’t need to be a great writer to make passive income from Amazon KDP, you could just publish low content books. Low content books require considerably less effort than traditional books and can be highly profitable. You just need to come up with an eye-catching themed design and upload it to Amazon to make money online from your idea.

7. Amazon Merch On Demand

Amazon Merch On Demand is how to make passive income from home by selling designs on Amazon. Amazon Merch is a print-on-demand service like Printify or Printful, where you upload designs to be printed on generic items like t-shirts, coffee cups, or bags. Your items are only printed when they are purchased, so there’s no additional overhead for stocking products. Amazon pays you a royalty each time your product sells. These royalties are based on your product’s price minus Amazon’s cost to manufacture the product and any taxes. 

You can make up to $10,000/month with Amazon Merch, according to The Shirt Academy. Your income potential depends on the quality of the designs you submit, how you promote your products, and your seller tier. Amazon seller tiers include 10, 25, 100, and 500 active designs on the platform. To move up, Amazon has to approve the quality of your design and you need to sell at least the amount of the tier level. For example, to move from the 10 tier to the 25 tier, you need to make at least 10 sales. You can learn how to make money on Amazon through Amazon Merch by taking a Merch course like Ryan's Method.

How to make passive income with Amazon Merch?

  1. 1
    Apply to Amazon Merch On Demand - It can take several weeks or even months for Amazon to accept you into the program. 
  2. 2
    Submit high quality design - You can use design tools like Photoshop or Canva to create your own designs, or hire a designer. 
  3. 3
    Promote your designs - You need to promote your designs if you want Amazon customers to see them. You can promote using Amazon PPC advertising, blogging, or social media. As you sell more products, Amazon will make it easier for their customers to find your products through organic search.
  4. 4
    Research trends and optimize business - If you want to keep making passive income from Amazon Merch, you need to stay in tune with current trends and upload new designs from time to time. For example, selling masks with cool graphics during the pandemic. 

The unfortunate disadvantage of passive income on Amazon

The unfortunate disadvantage of making passive income on Amazon is that you rely on Amazon to run your business. Unlike a local lead generation website where you own your own piece of digital real estate that no one can take from you, making passive income through Amazon means you share part of your business with the platform. If Amazon goes down, you go down. If Amazon changes their rules, your business needs to react or risk consequences. When you make passive income through Amazon, your business is at Amazon’s mercy.

Can you realistically make money on Amazon?

Yes, you can realistically make money on Amazon and the company offers many ways to do so. Depending on how you choose to make money on Amazon, you can make anywhere from a few hundred to hundreds of thousands of dollars a month! If none of the above business models are for you, you can also check out Amazon opportunities like Amazon Flex, Amazon Handmade, or Amazon Mechanical Turk. As one of the largest companies in the world, Amazon offers many ways to make money.

However, if your primary goal is to make passive income in a matter of months, local lead generation is a better option for you. All of the ways to make passive income on Amazon require you to put a few years into the business, unless you have a lot of startup capital to speed up the process. With a local lead generation business, you can start generating thousands of dollars in passive income in just a few months. Local lead generation startup costs are also quite low, and the business model requires very little recurring overheads costs, so you keep most of the profits from your business. Whether you decide on local lead generation or Amazon FBA, passive income has the ability to substantially enrich your life and it's definitely a worthy goal to go after. 

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Ippei Kanehara

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