Different people define passive income in different ways. According to Wikipedia, passive income is income resulting from cash flow received on a regular basis, requiring minimal to no effort by the recipient to maintain it. This means that maintaining passive income requires an ongoing effort and maintenance from your end so that you can achieve some sort of financial freedom from it. This article will discuss various ways of making passive income online, which you can use to make money.

Making Passive income Online is a good supplement to regular 9 to 5 job earning and is important to people who want to follow their passion and make money from it.

There are various types of income that fall under passive income. These are;

  • Rental income – which includes profit from ownership of capital, rent from ownership of resources, incoming cash flow from property or any piece of real estate, and interest from earning financial assets.
  • Trade or business activities in which the recipient of the income is not directly involved.
  • Royalties – payments made by one company to another in exchange for the right to use intellectual property e.g. Music, Videos, Books

In this tutorial, I will be showing you different ways to make passive income through online mediums. We’ll talk about selling digital products, selling physical products, and selling both digital and physical products.

Myths

There are various myths associated with passive income. Some of these myths are;

  • Making passive income is easy – some people think it takes just a few hours and a small amount of money and they’ll be set to make a lot of money for the rest of their lives
  • Passive income is very profitable – people think they’ll make a lot of money in a very short period of time.
  • Passive income requires very little work

To be able to maximize your result from this guide, you will need a website. WordPress is one of the best platforms for creating fast and relatively cheaper websites. Downloading WordPress itself is free and you will only require to pay for hosting. If you can’t create a WordPress yourself, you can talk to a WordPress developer and have them create it for you at a price. Get some very fair prices here.

If you are from Kenya (The official home of this website), I’d recommend you use True Host for your hosting services. They offer very competitive packages including a free package with 1000MB bandwidth to test your site. If you are from other regions you can use one of the popular WordPress Hosting providers like Dreamhost, Siteground, and Bluehost.

Read: How To Make Passive Income, Selling Digital Products

There are various ways you can sell physical products online. They are discussed below…

How to make Passive income Online Selling Physical Products

DROPSHIPPING

Passive income

Dropshipping Model (Source: gustashoes.com)

This is a retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it passes on the sales order to the supplier, and then the supplier ships the product directly to the client. This means that the merchant never sees or handles the product. It enables a company to operate without maintaining inventory, owning a warehouse to store products, or having to ship the products to the clients. Dropshipping is a good way to make passive income although, by itself, it might not be enough. There are various pros and cons of dropshipping.

Below there’s a table showing the pros and cons of dropshipping

Pros Cons
1. It’s easy to set up. 1. Lower profit margins compared to wholesaling or manufacturing.
2. Very low setup costs. 2. Complete liability if something goes wrong.
3. You don’t have to worry about exorbitant overhead costs. 3. The brand has a significantly lower level of control.
4. The risk of drop shipping as a business model is significantly lower. 4. Certain issues may arise due to complexities in shipping.
5. The business is location-independent and can be run from anywhere. 5. Level of competition is relatively high.
6. There’s a lot of variety in terms of the products you want to sell.  
7. More time and resources to scale your business.  
8. Reduced losses on damaged goods.  

Dropshipping is a good business model for first-timers who want to venture into the online business world as it is a low-risk, low investment method of starting your own business.

FULFILLMENT BY AMAZON (FBA)

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(FBA) is a service provided by Amazon that allows sellers to ship their products to an Amazon fulfillment center, where items are stored in warehouses until they are sold. This service provides packaging, storage, and shipping assistance, taking the burden off of the seller.

How it works:
  1. You send your products to amazon
  2. Amazon sorts and stores your products
  3. When a customer orders one of your products, Amazon picks, packs, ships and tracks the order for you.
  4. Amazon handles customer service – a lot of it
  5. You get paid

This is a little bit like dropshipping because the seller of the goods does not necessarily have to be the manufacturer. You choose the products that you want to sell, contact the manufacturer, have them deliver the goods to Amazon, make sure the manufacturer keeps delivering the goods to Amazon, advertise your products, and get paid.

While that sounds really easy to do, you have to thoughtfully choose products that will sell fast and products with low competition.

Advantages of using Fulfillment By Amazon
  • Effortless logistics and shipping – Fulfillment can be quite time-consuming. Higher sales mean more time sorting, packing, shipping, and more expenses. FBA lets you outsource the entire process, taking advantage of their expertise and experience.
  • Discounted shipping rates – Amazon has contracts with major shipping carriers which gives them steep discounts on shipping costs. Amazon passes the discounts to the sellers in form of reduced shipping prices when sending your inventory to Amazon.
  • Customer service management – Amazon has a reputation for excellent customer service. They provide 24/7 customer support through phone, chat, and email.
  • Management of returns – Returns can be a headache. From dealing with upset customers to inspecting returns and handling all of the administrative roles, Amazon handles all of that for you.
  • Storage space – Using FBA means that you don’t have to worry about storage.
  • Quick delivery – Amazon has fulfillment centers all over the world and so your customers can reliably get their products delivered to them in a few days.
  • Fulfillment of orders from other channels – you can sell products on other channels (like BigCommerce) while still getting Amazon to fulfill those orders. You can even automate the process for free by using the FBA Shipping App.

All this comes at a price and Amazon charges for storage and shipping. Check out Amazon’s pricing here.

RESELLING ON EBAY

eBay is the biggest and most known site for auction and selling goods on the internet. It facilitates consumer-consumer and business-consumer sales through its website. The website is free to use for buyers but to sell, you pay a small insertion fee to list your product and a small portion of your selling price when a product sells. The costs will vary from country to country.

You can sell your own products or purchase items and then resell them at a markup. You can also sell things on behalf of other people. To start selling on eBay, go to ebay.com and click the ‘Sell’ link to open an account.

If you found this article useful, you can also take a look at how you can make passive income online selling Digital Products.

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