As an open-minded e-commerce entrepreneur, you must have thought of increasing your passive income. The desire for more money, flexibility, and freedom, must have driven you into exploring new, viable models to build more income. Unfortunately, with the influx of numerous passive income ideas, it’s becoming increasingly challenging for online traders to pinpoint the best.
The truth is; no one would hate a model that churns out a steady income without the need for active ongoing work or constant involvement. However, getting a passive income model up and running is a lot more complicated than you might think. So, when you finally decide to take action, it would be nice to pursue the most straightforward models first.
This article will help you establish innovative systems that deliver passive income into your account with reasonably low effort. Our experts have done rigorous research and found drop-shipping, white labelling, and wholesaling/warehousing to be the easiest e-commerce ideas for passive income.
Let’s get started!
What is passive income
Before we delve into the details of the three passive income ideas, let’s first understand what passive income is.
Passive income is the income you earn without inputting a lot of active work or involvement. Colloquially, passive income is used to define the profit gained with a minimal contribution via a range of ventures that necessitate little daily effort on the entrepreneur’s part.
Passive income is great because it takes the pressure off other income streams. It enables you to maintain a steady income flow even when operating a business with high and low seasons. Even better, earning passive income frees up more time and allows you to engage in more fulfilling ventures.
The major proponents of generating passive income are customary of be-your-own-boss and work-from-home professional lifestyles. However, it’s good to note that there is no magic to earning passive income. Most of the passive income ideas require a lot of upfront work to deliver desirable results.
If you have been keen on the current e-commerce trends, you have probably come across the term dropshipping. While the concept is relatively as old as the 1950s, the term drop shipping is entirely new. With the proliferation of modern e-commerce sites, drop shipping, which was considered tactical expediency, is slowly becoming a common denominator.
So what is drop shipping, and how can it boost your passive income?
Dropshipping is a unique, cost-cutting retail fulfilment model which enables a business to operate without owning a warehouse, maintaining inventory, or shipping products to the end-users themselves. It is an innovative business model where a retailer partners with a manufacturer, wholesaler, or warehousing distributor.
The role of the dropshippee or the retailer is to procure sales. On the other hand, the manufacture or warehousing distributor is mandated to package the products and ship them directly to the end-user. For the e-commerce sites, dropshipping is primarily a hands-off process where the merchant never handles or sees the product being shipped to the retail consumer.
For starter, breaking into the drop shipping scenes can be a daunting process, but when done right, the benefits are mammoth. One of the salient benefits is that dropshipping is easy to start. It requires no prior business expertise or experience; you only need to understand the basics to get the business up and running. You will learn the rest along the way.
Additionally, dropshipping doesn’t require a huge upfront investment. The entire model requires so little, and it’s easy to run the business right from your PC or laptop. Once you get the business going, the whole process becomes completely hands-off and only requires little effort from you. You don’t have to spend a lot of hours every day running your business; everything happens on autopilot.
Even better, dropshipping is flexible. It is an intriguing business model that allows you to stipulate your own rules and be your own boss. It gives you the freedom to work from any place – home, restaurant, and even when on the move. The opportunity to work at the most convenient times makes dropshipping an ideally perfect idea for the busy entrepreneurs.
On the flip side, dropshipping has its drawbacks. For example, with the model, the manufacturer or the supplier is in complete control of the fulfilment and shipping process. This presents several risks, including:
- It easy to sell a product that is out of stock since you are not maintaining inventory.
- When dealing with multiple suppliers, order processing can be complicated.
- Customer service becomes more challenging.
- Initially, dropshipping offer slim margins.
Amidst the increasing competition in e-commerce today, entrepreneurs are coming up with unique ideas to gain a competitive edge and enhance passive income. White labelling has emerged as a favourite for many entrepreneurs in the e-commerce space.
So what is white labelling?
White labelling is an interesting business arrangement where a business is legally permitted to place its brand name on a product designed and developed by a third-party manufacturer. The prospect of having your brand’s name on a product you didn’t manufacture can be irresistibly endearing. This is because it enables you to distribute and sell top-notch products that you spent no time or money designing and developing.
White labelling is legally permissible, but the parties abide by the pact in anonymity. The idea is to guard the integrity of the intermediary and ensure no retail consumer suspects that one manufacturer develops alternative products.
White labelling is not a new idea in the commerce world, but recently, it has gained widespread popularity thanks to its benefits. The concept has been extensively adopted throughout most industries, from business marketing to food services. White labelling enables you to stand on the shoulders of well-versed manufacturers and provide your customers with high-quality products while maintaining a high ROI.
So, how does white labelling work?
First, white labelling is an arrangement that involves two parties; the original manufacturer and intermediary brand. Under the white labelling agreement, the manufacturer undertakes to produce massive quantities of a commodity. The intermediary or the reseller buys the product from the manufacturer and repackages them.
White labelling is beneficial to both the reseller and the manufacturer. The manufacturer gets the opportunity to instantly sell massive quantities of products to the intermediary at a subsidized price. This means the manufacturer can recoup the investment quickly. On the other hand, when the reseller repackages and rebrands the products, he enhances the product’s value and sells the goods at a profit, while avoiding the hassles and cost of manufacturing.
As the reseller, white labelling can be a great time-saving tool to boost your distribution and enhance your income. The proliferation of this idea is quite evident, and if you have been keen when shopping, you may have noticed products being sold under the store’s own brand. In the e-commerce scenes, white labelling is becoming rampant because it requires few resources, and it is easy to implement.
With white labelling, it’s easy to build a reputable brand and maintain strong relationships with your customers. The arrangement can also be used as a channel to enhance brand visibility on a competitive market. White labelling is particularly rife in the digital market space, where one party handles the backend tasks while the independent agency accomplishes the marketing bit. You can boost your passive income by white labelling digital products such as software, downloads, prints, courses, and more.
Wholesaling and warehousing
Last but not least, you can boost your passive income through wholesaling and warehousing. The e-commerce industry and B2B market are growing fast. This means the B2B e-commerce is becoming huge and is showing no signs of cooling off.
Savvy e-commerce entrepreneurs have spotted the opportunity, hence the advent of e-commerce wholesaling and warehousing concepts. In recent years, wholesale e-commerce has outwitted manual ordering, and the trend is creating massive opportunities for forward-looking entrepreneurs. Reputable industry player such as Amazon and Alibaba have clearly shown that B2B e-commerce is not a fad, but a phenomenal shift in the future of business.
So how can wholesaling and warehousing boost passive income?
With the B2B business model, you buy products in massive quantities, instead of one-off purchase associated with drop shipping. This means you get incredible pricing for the goods. The model gives you an option to sell directly to consumers for better margins or sell in bulk to businesses for lower margins.
The major disadvantage of this model is that it requires massive upfront effort and investments. This because you need the financial muscles to purchase goods in bulk, house them, and sell them to suppliers, distributor, or directly to consumers.
Whether you have a steady paycheck, having a side hassle can be an excellent way to earn financial freedom. In the modern business world, it is becoming increasingly difficult to find a model that can deliver passive income more constantly. The ideas we have discussed above are the best for e-commerce entrepreneurs looking to boost their income.
Dropshipping is highly recommended for beginners since it is easy to start and doesn’t require massive upfront investments. On the other hand, white labelling is an incredible business model to enhance your income stream, but might it requires a huge upfront investment.
Besides, wholesaling and warehousing are good, but are not meant for beginners. The ideas are beneficial but require a lot of upfront effort and financial resources. However, when the models break even, they can be a reliable source of passive income.