Top 5 Passive Income Ideas: Is Amazon the Best?
Passive income has become an extremely popular idea over the last ten years. Everyone loves the thought of collecting income while they sleep, but few ever reach that point.
But if you want it bad enough, passive income is totally possible. All you need is the right amount of determination, and a good idea.
With this in mind, we’ve put together our list of the top five passive income ideas for 2023, most of which are perfect for beginners and require a low capital investment.
Table of contents
Keep reading to learn how you can make this dream a reality in the new year.
What is Passive Income?
Before we launch into our list it’s important to actually define passive income, as there are a number of misconceptions around it.
Passive income is a way of making money that involves little or no effort from the earner. An example would be a website that generates ad revenue. Every time someone clicks on an ad you make money without doing any work.
But is that really possible? It’s not surprising that when most people hear about this concept they have their doubts. To a reasonable person, it sounds too good to be true.
Here’s the real secret: there’s no such thing as true passive income. Let’s look at our website example above.
On the surface, it seems like there’s no work involved. However, websites like this don’t just magically appear. In order to grow a business like this you’d have to:
Research niches in order to find one that has the right balance of demand and competition to be profitable.
Design the website, or hire professionals to build it for you.
Develop engaging content that will attract readers.
Optimize the site for SEO to ensure it appears in search results.
Maintain and update the site to keep readers coming back.
All this takes a lot of work, at least to start. You could argue that you could simply buy an existing website like this and then enjoy the profits. But then the question becomes “how did you acquire that money?” Most likely you worked hard to get it.
Even if you didn’t have to work to obtain the money, you’re still taking on risk in buying the website. Its earnings could drop off and there’s a chance you’ll never make your money back. Every opportunity comes with a cost.
So What is Passive Income Really?
When we talk about passive income, what we really mean is working hard today in order to build something that will generate income in the future. This could be a business or product that, once set up, will provide a consistent source of revenue with only a small amount of involvement from yourself.
This is why most people never achieve passive income. Once they realize they actually have to work at it they give up.
However, if you’re willing to put in the time the possibilities are endless. You can create something awesome that will give you financial freedom and may even become your primary source of income.
This doesn’t mean you’ll become a rich billionaire, but you could end up earning a comfortable living.
The 5 Best Passive Income Ideas
Successful passive income starts with the right idea. What are the best passive income ideas that have proven successful for many entrepreneurs?
Sell Products on Amazon
Start a Blog/Website
Write an E-Book
Create an Online Course
None of these ideas are free (there’s no such thing as a business with no start-up cost), but most only require a minimal investment. They’ll also work anywhere, whether you’re in the US, Canada, the UK, Australia, Europe, or any other international location.
1. Sell Products on Amazon
Starting an eCommerce store is a great way to earn money, as more and more people are beginning to shop online. But it’s also a lot of work. Luckily, Amazon has made the process a lot more passive.
The process is actually fairly simple:
Step #1: Find a unique product to sell. Use research tools when evaluating items to choose the best ones.
Use the AMZScout Product Database to get a starting list of potential Amazon products
Go to the AMZScout Product Database.
Start your free trial. If you don’t have an account, you will automatically be directed to a sign-up form. Enter some basic info, no cards required, to start a free trial.
Set product criteria. The product database has search filters you can use to specify your products. You can filter by product categories, number of sales, and keywords. You can also use our Product Selections if you aren’t sure. For more information on search criteria, check out this article.
Get your results. Click Find Products.
Сheck the profitability and competitiveness of chosen products with the AMZScout PRO Extension.
Using the AMZScout PRO Extension to Find Products with Passive Income Potential
More detailed data to determine your potential profits and competition comes through the AMZScout PRO Extension. Follow these steps below to understand how to use this extension:
1. Install the AMZScout PRO Extension.
2. Open the AMZScout PRO Extension.
Amazon.com opens automatically to signal your installation is done.
Enter simple info to start a free trial. If you aren’t registered, you’ll be redirected to a sign-up form. If you already have an account from the prior instructions, sign in.
Search for a product you found from AMZScout Product Database. Focus on finding products or niches that you see potential in.
You need to click the AMZScout icon and open the extension again after your results appear.
3. Analyze niche and product profitability. Pay attention to net margin, estimated sales, and revenue of your niche at the top of the screen. You can also find these indicators under each product in the results table.
4. Calculate estimated monthly profit.
Click on your target product.
A new line will appear underneath the product.
Click Profit Calculator and fill in all necessary information (price, cost, etc.)
Check the estimated monthly profit to see if it meets your earnings goals.
5. Analyze niche demand. The Niche Score is a simplified way to see the need across an entire niche.
6. Make sure demand is high consistently. Look at the Niche History to determine if demand is consistent or seasonal.
Step #2: Source your product from retail stores, other online marketplaces, wholesalers, or manufacturers.
Step #3: If selling a product that isn’t already on Amazon, create your product listings and optimize them for Amazon SEO using keyword research tools.
Step #4: If you do not (or cannot) ship all orders yourself, use the Fulfillment by Amazon (FBA) program to fulfill your orders. Send all your inventory to Amazon to be stored in one of their warehouses. When someone places an order they’ll pack and ship your items for you.
While there’s some work involved initially, this business becomes very passive and low-stress once everything is set up. The FBA program means the majority of the work (packing and shipping orders) is taken care of for you.
All you need to do is monitor your inventory, order more when you’re running low, and send it to Amazon. While starting this business isn’t cheap, it’s not overly expensive either. It’s also scalable. Start with one product and then continue to add more as your business grows.
Best of all, this type of small business has proven to be very profitable, with a number of entrepreneurs quitting their full-time jobs to pursue this as their career. It works as a part-time gig as well.
2. Start a Blog/Website
As mentioned earlier, a website that’s able to generate income off the traffic it receives is a prime example of passive income. While podcasts and video platforms like YouTube are becoming more and more popular, blogging is still an excellent way to make money.
The idea here is to create pages that rank highly for popular keywords. Once enough of your pages start generating traffic you can monetize the site through advertising or affiliate marketing. You can even develop your own products and promote them on your site.
The key to making this work is building your site around the right search terms. Use keyword research tools to find a group of related terms that:
Receive a lot of traffic. At least 100 searches a month, and ideally you have a few that get over 1000 searches a month.
Are easy to rank for and don’t have a lot of competition. If there aren’t many sites creating quality articles on these topics it will be easier for you to rank for them.
Creating a website isn’t difficult these days. There are a number of services that hardly require you to have any computer skills. It’s also fairly affordable.
Once you have your keywords write articles that focus on them, then promote your articles through social media, networking, and link building. Ranking pages on Google takes time though, so don’t expect a quick turnaround or to see results immediately.
You only need a few pages to rank to generate a good income, although it’s recommended to continue to post new articles at least semi-regularly to keep getting traffic.
3. Write an E-Book
It used to be that in order to make money from a book you’d have to get signed by a large publisher. But that’s no longer the case.
The rise of the internet means self-publishing has become a legitimate way to earn an income. Sites like Amazon allow you to easily distribute and promote your books without the need for a large publisher to back you.
The first step to writing an ebook is to decide what type of book you’re going to write. At a high level, you have two choices:
Non-Fiction: These books are generally easier to write and promote, however, they don’t have the same profit potential as fiction. That being said, a good non-fiction book can still generate a very good income.
Fiction: A popular fiction book can make you a lot of money. However, writing quality fiction takes practice and it’s much more difficult to find an audience. If you’re not a good creative writer stick to non-fiction.
There are some costs involved, including paying people to help with editing, formatting, and cover design, but overall this is one of the more low-cost forms of passive income. And if you write a book that becomes popular it can be very profitable.
4. Create an Online Course
Online courses have exploded in popularity, with lots of people searching the web to learn new skills. Like other entries on our list, the internet has made it easier than ever to create and publish online courses, making this a great passive income opportunity.
To start, you’ll need to choose a topic. This should be something that:
You have experience with and know a lot about.
Has a lot of demand. There need to be enough people interested in it in order for you to make money.
Next, you’ll need to create your course. This could be in the form of a PDF, audio file, or videos. While all of these formats work, video is by far the most popular and is seen as having the most value by consumers. Plus, with virtually everyone owning a smartphone that has a video camera, filming video has never been easier.
Finally, you’ll need to publish your course somewhere. If you have a large following you could promote it on your own website. You could also post it on YouTube. Or you can use one of the many online course sites, like Udemy and Coursera to distribute your material.
While creating a course does take time, for the most part it costs very little money and you should easily be able to keep your costs under $500.
5. Real Estate
This might be the truest form of passive income on this list.
Buying real estate means you could potentially earn hundreds of thousands of dollars as your investment appreciates in value. You can also rent out your property for additional income.
Of course, not everyone has the money to invest in real estate. This requires a very high initial investment, so if you have little or no money this won’t be for you.
Real estate investment isn’t completely passive either. You still need to manage tenants and deal with any repairs and maintenance issues that come up.
There is also a large amount of risk. An economic downturn could cause your property to decrease in value, resulting in a large loss.
Still, for those who can afford it real estate investment is the ultimate source of passive income.
Why an Amazon Business is the Best Way to Earn Passive Income
While all these ideas are definitely worth trying, selling on Amazon has proven to be one of the best and most profitable ways to make passive income. Many entrepreneurs tried for years to earn passive income successfully, only to finally make it work with an Amazon business.
We talked to three current Amazon sellers to learn why this business model is their favorite.
Why Do They Sell on Amazon?
Each seller has their own reasons.
According to Sebastian Castaneda, “Amazon FBA makes it incredibly easy to get a business up and running as Amazon is the king of traffic. So being able to tap into their network of shoppers allows just about anyone to build a strong brand around just about any niche!”
For Amy Hunt, it’s more about profit and consistency. “I have a variety of income streams,” she says. “But selling on Amazon and eBay is by far the longest standing stream of income that I've had.”
Vova Even tried a number of different businesses. But for him, selling on Amazon was the one he finally found success with. “It's the first business that worked for me and I really like it because you can work from anywhere in the world,” he says.
What Do They Like Most About Selling on Amazon?
There are a number of advantages to an Amazon business.
For Sebastian, the answer is simple: “The pros are having access to Amazon’s gargantuan shoppers base.”
Amy, on the other hand, likes the ads. “Ads on Amazon is a daunting task but worth it most of the time,” she says. “I have sold a LOT of products because of the ads I have run for them. I still sell products without the Ads but it does move them along quickly.”
Flexibility is the biggest plus for Vova. “Pros are that I am able to work in my own hours and from any location.”
How Much Time Do They Spend on Their Amazon Business?
As you’ll see, when set up right an Amazon business can be very passive and highly automated.
Sebastian says he spends “roughly 2 hours per day,” and that “most of the work revolves around optimizing your Amazon advertising and responding to customer messages.”
Amy spends even less time on her business. “On average and MAX amount of time would be about 30 min per day,” she says.
Vova’s daily work takes him “about 2 hours.” However, he adds that “it might be more if I want to give in more. But for regular days, about 2 hours.”
How Profitable is an Amazon Business?
It may surprise you to learn just how much an individual seller can make on Amazon. This type of business continues to generate some of the highest returns of any idea mentioned in this post.
“The average monthly sales are $38k,” said Sebastian, when asked how much he made per month.
Vova also enjoys a similar income. “We average 20k offseason per month and around 50k on season per month (seasonal summer products),” he says.
Where Do They Run Their Business From?
Sick of working from office spaces? One of the best things about selling on Amazon is you can do it from anywhere.
Sebastian works from his home office. “You can even work from your bed if you want,” he added.
Amy has a similar response: “Most definitely AT HOME but honestly, it gives me the freedom to go anywhere and do anything at any time!”
Vova also works from home. “Pros are wearing underwear while answering emails and searching for products,” he says.
How to Get Started
Getting started is easier than you think. We’ve broken the process down into a short step-by-step guide:
Find a Niche and Products: We recommend using AMZScout Product Database to generate ideas and then validating their profitability with the AMZScout PRO Extension.
Here’s what our professional sellers said when we asked them what categories they sold in:
Sebastian: “We sell products in the baby and the home and kitchen categories.”
Amy Hunt: “A LOT! There isn't just one category I have sold in. I move all over the place with categories that I sell in based on the research I find using AMZSCOUT. I do, however, have a custom product that I produce with variations that I am consistently in the JEWELRY category with.”
Vova Even: “Mainly patio and lawn.”
2. Find a Supplier for Your Products: If you’re using the Pro Extension, just click “Find at Alibaba” or “Find at Google” to instantly find suppliers.
3. Fulfill Your Orders: Smart sellers use the FBA program for this. Simply send your inventory to Amazon and let them take care of the rest.
4. Promote Your Products: Use Amazon ads to promote your items and drive more traffic to your listings.
As you can see, passive income is definitely real. It may involve some work up front, but the rewards are worth it. So, what are you waiting for? Start now and give one of these ideas a try.