How To Make Passive Income Online From Drop Shipping

Published by Timothy Olson — 11-5-2018 at 3:33 PM UTC


Passive income can work on a variety of levels. You are going to find that drop shipping represents one of the most interesting possibilities. When you begin to appreciate drop shipping, you will be able to appreciate it further as a potential passive income stream.

Drop shipping can generate flexible, creative income. To begin with, you’re going to want to understand how drop shipping exists as a concept. 

Defining Drop Shipping

Drop shipping is similar to the standard retail model, but there is one significant difference. With drop shipping, the seller does not own or stock the inventory. Instead, after taking an order from a customer, they will have the order fulfilled and shipped to that customer. 

As you can imagine, there a number of advantages to this model.

You should also begin to see why drop shipping can prove to be such a great example of how to earn passive income. Drop shipping usually comes from a wholesaler or manufacturer.

Advantages Of Drop Shipping

One of the main benefits to drop shipping is that it cuts down on expenses. From the beginning, your investment into your drop shipping endeavor can be quite low. You don’t have to invest or deal with the inventory upfront, which can prove to be significantly useful to those who do not have a lot of capital to invest.

Furthermore, drop shipping also comes with the benefit of not being very difficult to start. You don’t have to put together a brick-and-mortar business. You don’t have to look for warehouses.

You don’t even need to worry about tracking returns, packing/shipping orders, or maintaining your inventory levels. All of those things are being handled by your wholesaler or manufacturer. All you are really doing is providing people with the avenue to purchase what they need.

Obviously, drop shipping also comes with the advantages of offering a low overhead, as well as the ability to work with a variety of locations. You can certainly use the freed up space to offer your customers a wider range of products than many of your competitors.

There are certainly some challenges to drop shipping that you are going to want to be aware of, as well. For example, relying on a supplier can be problematic at times, particularly since you are relying on them for absolutely everything.

You will also want to note that shipping, ordering, and maintaining inventory can prove to be extremely complex tasks, if your drop shipping ventures happen to expand. 

However, at the end of the day, the advantages of drop shipping clearly outweigh any challenges  you may encounter.

Does Drop Shipping Work As A Passive Income Idea?

The advantage of being able to eliminate inventory/overhead also comes with the challenging of being able to focus more intently on your business. This means that you will have a significant amount of time to work with optimization and marketing.

This is where the work comes in. However, keep in mind that there is really no such thing as a completely passive opportunity with passive income. You are going to have to do at least some work. However, the nice thing about passive income is that you are in control of how much work ultimately goes into things.

With drop shipping, you’re talking about something that can take up as much time as you are willing to give it. In other words, if you want to focus on a highly-specialized, but potentially lucrative niche, then you really won’t have to do much, in terms of maintenance and more.

However, if you plan to offer the largest, most diverse range of products possible, you will want to keep in mind that you could be looking at a sizable time/money investment.

As is the case with most e-commerce ideas, the smart thing to do is to start simple. Once you have established marketing strategies, and once you have begun to build a steady reputation for your handful of products, you can begin to offer more.

You are also going to want to do as much research as possible on your manufacturers. Many large drop shipping businesses bring in their supply from multiple manufacturers/wholesalers. 

While this is something you can work towards, you don’t want things to get too complex too quickly.

Good ways to get started include:

  • Focusing on the fifty-to-two-hundred dollars range.
  • Looking for products that are relatively inexpensive to ship.
  • Considering items that will prove to be pretty stable for a lengthy period of time.
  • Building inventory around items that users will not be able to price shop easily.

This foundation will build your early efforts with drop shipping. As time goes on, and through smart marketing, you should be able to make additions to your inventory as needed. All the venture is really going to require of you is some minimal ongoing maintenance for your end of the whole process.

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About Timothy Olson

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Welcome! My name is Timothy Olson. I have been working online since 2003 and I currently earn a full-time living from home. (I earn commissions promoting affiliate products.) Earning a living from home online takes a lot of hard work and determination. There is a learning curve, you will need to invest some money into your business. It will take some time to see results of your hard work. A valuable tip: If you are just thinking about starting your own online business, focus on building an email list first! (You simply cannot become successful online without your own email list.)