Updated October 2023
In today's fast-paced digital world, it’s easier than ever to set up alternative income streams. The realm of ecommerce offers a wealth of opportunities to make extra money either on the side or full time!
Let’s delve into four popular ways to make passive income using ecommerce:
3. Affiliate Marketing
4. Selling Digital Products.
Dropshipping has soared in popularity in recent years as a solid way to earn a passive income, with no experience required.
How does dropshipping work?
Dropshipping is a retail fulfillment method where you never actually see the products you sell. Instead, when an item is sold, you purchase the product from a third-party supplier who ships it directly to the consumer.
Low startup costs
Dropshipping lets you start an ecommerce business with minimal upfront investment. There’s no need to purchase inventory, pay for storage, or pay for other typical startup costs.
Easy to set up
Dropshipping is easy to set up. It’s as easy as finding a good product, a reputable supplier, and setting up a website. Platforms like DropWired make this process even easier, letting you integrate your ecommerce website directly with dropshipping suppliers. DropWired, for example, integrates with AliExpress.
No inventory management
Unlike traditional retail models, dropshipping eliminates the need to manage inventory. You don't have to worry about storing, tracking, or shipping products- freeing up your time and resources to focus on other aspects of your business
Wide product selection
Dropshipping allows you to offer a wide range of products without the limitations of physical inventory. You can easily expand your product catalog and adapt to market trends, providing customers with a diverse selection to choose from. Some common marketplaces for dropshippers include AliExpress, DSers and Modalyst.
With dropshipping, you can operate your business from anywhere with an internet connection. As long as you can communicate with suppliers and manage your online store, you have the freedom to work wherever you wish.
Lower profit margin
Since you're not purchasing products in bulk for a reduced price, the profit margins in dropshipping tend to be lower compared to traditional retail models.
While relying on your supplier for product management has its benefits, any issues they encounter can directly impact your customer satisfaction and business reputation.
Limited control over product quality
With dropshipping, you don't have direct control over product quality and fulfillment. It's crucial to choose reputable suppliers and maintain clear communication to ensure that your customers receive satisfactory products and experiences.
Dropshipping offers a compelling retail fulfilment method for ecommerce entrepreneurs. Its low startup costs, inventory-free operations, and flexibility make it an attractive option for making a passive income on the side.
Similar to dropshipping, a Print on Demand (POD) model lets you sell products without needing to ever handle the product yourself. However, with POD, your own custom designs are printed onto the products, making it a great venture for those looking to build a brand by creating a line of merchandise.
The process is pretty straightforward, you simply sign up to a print-on-demand provider, browse their range of blank products, choose which ones you want to sell, then upload your designs. The supplier then handles the printing, fulfilment and shipping of the products for you, and because each item is made to order, you only pay for the products that are sold!
The print-on-demand model eliminates many of the initial challenges of starting a profitable business, and is generally a low risk way to start making money online.
Easy to start
All you need to get started is a subscription to a print-on-demand service like Printify or Printful and an ecommerce store. From here, you simply select a blank product, upload your custom design and sell it through your online store.
Starting a print-on-demand business is more cost-effective than traditional startups because you don't need pricey equipment or a large inventory. Your primary overheads are typically the subscription fees for your POD provider and ecommerce platform, which translates to higher profits.
Shipping handled by POD supplier
With shipping handled by your POD provider, you have more time to focus on other aspects of your business, including: new designs, brand development and sales.
Large product variety
You can sell almost anything with print-on-demand.
POD providers, like Printful and Printify offer a large catalog of products to choose from, including clothing, hats, bags, accessories and much more.
With print-on-demand, you get full creative control over your products. Injust a few clicks,upload your designs and create unique products, choosing the designs, styles and colors that appeal to your target market. Once the designs are ready, your POD suppliers give a preview tool to see how your designs look, letting you check out how your product looks in real-time.
The creative control afforded by print-on-demand means you can easily start your own, recognisable brand that stands out from the competition.
3. Affiliate Marketing
Affiliate marketing is a concept that’s been around for years, but ecommerce has made it easier than ever.
If you’re unfamiliar with affiliate marketing, it’s where money is earned via commission each time a user clicks on a specific link or makes a purchase through your referral;, in other words, promoting other people's products or services and earning a percentage of the sale as a commission. This can be done through various channels such as a website, blog, social media platforms, or email marketing.
For example, let’s say you run a popular fitness Instagram account and have a website too, you could advertise fitness and health products on these platforms through affiliate marketing to gain a commision on conversions.
Affiliate marketing pros
No inventory or customer service responsibilities
Once you set up your affiliate links and drive traffic to them, you earn commissions without actively selling products, managing shipping, or providing customer support. Your main focus is promoting and driving traffic to affiliate offers.
Diverse product selection
As an affiliate marketer, you have the freedom to choose from a wide range of products and services to promote. This allows you to align your marketing efforts with your audience's interests.
Flexibility and scalability
Affiliate marketing allows you to work on your own terms and schedule. You can scale your efforts by promoting multiple products or services or by expanding your reach to new audiences.
Affiliate marketing cons
Commission rates vary
Commission rates vary significantly depending on the affiliate program and the products or services you promote. It's essential to research and choose affiliate programs that offer competitive rates and align with your target audience's needs.
Compliance and disclosure
It's important to comply with relevant advertising and disclosure guidelines, including your affiliate relationship and promotion of affiliate products. Familiarize yourself with your local regulations to ensure you stay within legal bounds.
Affiliate marketing can be a profitable and flexible way to generate passive income online. By selecting the right affiliate programs, promoting relevant products, and building trust with your audience, you can effectively monetise your online presence.
4. Selling Digital Products
Selling digital products is another avenue for creating passive income in the ecommerce realm. Digital products, such as e-books, online courses, templates, software or digital artwork can be created once and sold repeatedly without incurring additional production costs.
With the potential to reach a global audience, you can generate passive income by leveraging your expertise and creating valuable digital assets that cater to the needs and interests of your target market.
Digital products pros
Automated delivery and scalability
Once the product is created, it can be sold to an unlimited number of customers without additional effort. Digital products can be delivered automatically through download links or email, enabling a streamlined process that’s easy to scale up.
Low production and distribution costs
Unlike physical products, your product is delivered online, eliminating production, inventory and shipping costs. This allows for high-profit margins and scalability.
Monetize your expertise
By creating and selling digital products you can monetize your expertise and share valuable insights with others.
Digital products can be accessed and purchased by customers worldwide, providing an opportunity for international sales and a broader customer base.
Digital products cons
Quality and Value Concerns
Delivering high-quality digital products that provide real value can be challenging. If the product fails to meet the audience's expectations, it may harm your brand's reputation.
Copyright and Piracy Risks
Digital products are susceptible to unauthorized sharing and piracy. Despite implementing security measures, the risk of copyright infringement always looms, which could lead to financial losses and other legal complications.
Selling digital products offers a lucrative opportunity to generate passive income by leveraging your expertise and creating valuable resources. With the right approach to product creation, marketing and customer engagement, you build a sustainable and profitable digital product business.
Start your next venture with ShopWired
ShopWired is the UK's top-rated ecommerce platform, making it perfect for setting up and running your own side business. With direct integrations with dropshipping and print on demand providers, ShopWired provides everything you need to get started making passive income.
Whether you want to sell your own products, sell custom print on demand products, sell digital products, or set up a dropshipping business, ShopWired has you covered.