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Is dropshipping passive income? Although the short answer is “no”, it all depends on how you define dropshipping. Dropshipping can provide passive income in certain situations, but generally, an eCommerce business is a business, and not passive.
Online stores have many moving parts. You will always need inventory if you sell physical products. This can be a full-time job. Dropshipping is easier, but it does require some babysitting.
Dropshipping sounds easy, but it’s not. Anyone who has tried it will tell you the opposite.
Dropshipping is difficult because you don’t have any control over the products that you sell. This requires more management. You need to be in touch with your suppliers to ensure your business continues to thrive.
What is passive income anyway?
Passive income can be defined as money that you make from an activity you don’t actively engage in every day.
It is usually something you have already invested in or where you have done the work once to make an asset that continues earning money every day without you actively participating.
Passive income is a term that comes from investing. You will continue to earn rental income each month if you invest in rental property that is positively geared.
You can keep your dividends without having to do any work if you invest in stocks that pay dividends.
Affiliate marketing is the best way to make passive income online. You can start a blog, or you can make a Youtube channel. You will earn commissions from ad revenues or affiliate sales for the work you’ve done once.
Sometimes, affiliate commissions can be earned for many years even after you have completed the work once.
This holds true even for selling digital courses online.
My opinion is that any business is not passive income. Dropshipping is a business that sells physical products and requires constant involvement. It is not passive income.
Although you can create a team to run your dropshipping business, it will still require daily work.
Dropshipping is not passive income
Dropshipping is a complex business with many moving parts. It can be difficult to keep track of your inventory, especially if you source your products through Aliexpress.
Dropshipping is not passive income for many reasons, but here are three main reasons.
How can you drive traffic to your shop? Facebook ads can be managed daily if you purchase them. Create new ads, optimize existing ads, test new creatives, ect.
This is also true for managing ads on Google, Pinterest, or any other platform.
It is definitely not passive as you must maintain a positive ROI. This requires a high level work effort – something difficult to outsource while still seeing a decent ROI.
It is more passive to do SEO and rely on search engine traffic. It takes a lot of work to get search engine traffic to grow.
Dropshipping is the best passive part of your business.
You will need to fulfill orders as part of your daily tasks when running a dropshipping business. This can be automated if you use Shopify, Oberlo, Woocommerce or Alidropship.
This is a part of dropshipping that can be easily outsourced as it requires little decision-making or skill.
Dropshipping from China will consume most of your time. Slow shipping times can cause a lot of customer support ticket and even though you have warned your customers about shipping times, they still get impatient.
Although customer support can be outsourced, you will need to have someone who is able to communicate with customers especially if dropshipping from Aliexpress.
It is my recommendation that you leave Aliexpress as soon possible. At the very least, you should consider Udroppy or CJ Dropshipping.
They can source nearly any product that Aliexpress can provide and ship within 5-10 days to the USA. This is twice the speed of Aliexpress.
You can either store your products in the USA yourself or find a USA supplier. I highly recommend Spocket as a USA supplier.
How to Setup Dropshipping To Make Passive Income
Let’s return to the original question: Is dropshipping passive income or not? Dropshipping from China isn’t passive income, but there are other ways to make dropshipping almost passive.
Print on demand is the best way to achieve this. Print on demand is a dropshipping model where you create designs that will be printed on to apparel products. All you have to do is provide the designs to your supplier of print on demand. They will take care the rest.
There are a lot of POD suppliers who have Shopify apps and you can plug it straight into your Shopify store.
You will still need to work if you rely on advertisements to drive traffic to the store. Although you will need to make or order the designs, this is a one-time job that can be repeated to earn money in the future.
Two ways can you make a dropshipping business that prints on demand almost passive.
Shopify and Printful
Printful is my POD of choice simply because of the quality of products and prints they produce. Although they are more costly, the reason I like them is very simple.
You won’t have to deal with customer support tickets for low quality products or prints because of their high quality.
This significantly reduces your involvement in the running of the dropshipping shop.
Traffic is the next part of passive income dropshipping. It is not a good idea to spend all your time on Google Ads and Facebook Ads. It’s too time-consuming and stressful, as you have to constantly manage your ROI.
Shopify actually works great for SEO and that is our strategy here. We will rely on free traffic from the search engines (as if there’s anything besides Google – lol).
To be successful with this strategy, it is important to target the right keywords. The easiest way to do this is simply to use a tool like SEMrush. It is easy to rank keywords that have a difficulty score lower than 60%.
Shopify and SEO are more complicated to set up. You need more content in your product descriptions and you need to build your products around the low competition keywords that you found with SEMrush.
It will take time. It may take 6 months before you see decent traffic. Your store will become almost passive once it starts to see decent traffic.
Printful and Etsy
If you are not interested in SEO and don’t have enough patience, you can switch to Etsy. Etsy has a huge marketplace with hungry buyers.
Although Etsy is very different from SEO, there are some similarities when it comes to accessing competitors. You can create a significant business if you target the right audience via Etsy. This is possible with little to no daily grind.
Setting up an Etsy store does take work. Printful makes it easy to create products. You can upload mockups directly from Priuntful and have them sent to your Etsy shop.
Printful will manage most of your store for a fee. Printful will take care of all your orders, ship them out, and send the tracking numbers back via Etsy.
This is the best way to make a dropshipping shop passive, in my opinion.
Dropshipping passive income – Conclusion
Dropshipping from Alixpress or running ads will not make your dropshipping business passive. Each of these pieces requires a daily grind.
You have a pot of gold if you already have traffic via a Youtube channel, blog, or Pinterest account. Printful, a print-on-demand service that allows you to create an apparel shop virtually hands-free, can be used.
Although selling information products is an option, it is not recommended. Selling physical products requires active participation.
You can make your USA business more passive by finding reliable suppliers. You can reduce the amount of work required to run a dropshipping company by finding reputable companies that offer great products and fast shipping.
It all comes down to your goals and needs. Are you looking to create a brand that can be recognizable and grow or are you simply interested in passive, smaller businesses that work well and do not require much effort?
Both of these options will require some work, but choosing a passive income stream will not require as much work. However, once the project is completed you can move on to the next one and continue to make a living from it for many years.