Passive income gets thrown around a lot online.
But building real, sustainable passive income through marketplaces like Amazon is absolutely possible — if you approach it like a business, not a side hustle lottery ticket.
Here’s a practical breakdown of how people are doing it in 2026.
Step 1: Choose the Right Marketplace Model
There are three core ways people generate income on online marketplaces from John Anderson of second hand box marketplace VerdeTrader:
1️⃣ Private Label (Most Scalable)
You create your own branded product and use Amazon FBA (Fulfilled by Amazon) to store and ship it.
You:
- Find a product with demand
- Improve it or brand it better
- Source from a supplier
- Send inventory to Amazon’s warehouse
- Let Amazon handle shipping and returns
Once optimized, this can become semi-passive because:
- Amazon handles fulfillment
- You automate ads
- You reorder stock periodically
This is the closest thing to “set and scale.”
2️⃣ Wholesale
You buy branded products in bulk and resell them on Amazon.
Pros:
- Faster to start
- Lower branding effort
Cons:
- Lower margins
- Competing for the Buy Box
It can generate steady income but is less “passive” long-term.
3️⃣ Merch / Digital Products
You upload designs or digital assets via:
- Amazon Merch
- Kindle Direct Publishing (KDP)
Low upfront cost. Lower risk.
Slower scaling — but highly passive once live.
Step 2: Validate Demand (Don’t Guess)
Passive income starts with data, not vibes.
Look for:
- 300+ monthly sales minimum
- 3–4 star competitors (means room to improve)
- Lightweight, small products (lower FBA fees)
- No dominant brand controlling the niche
Avoid:
- Trend-only products
- Electronics (high returns)
- Legal risk items (supplements without compliance)
If you’re used to SEO and competitive analysis — like ranking in tough niches — this is the same mindset. You’re looking for inefficiencies.
Step 3: Create a Listing That Converts
Amazon is a search engine.
You need:
- Keyword-optimized title
- Benefit-focused bullet points
- Clean images (white background + lifestyle shots)
- A+ Content (if brand registered)
Think like a conversion rate optimizer:
- Clear value proposition
- Objection handling
- Social proof via reviews
Small improvements in conversion can double profits.
Step 4: Use Amazon FBA to Make It “Passive”
Amazon FBA is what turns this from a side hustle into a system.
Amazon handles:
- Storage
- Picking & packing
- Shipping
- Returns
- Customer service
Your role becomes:
- Inventory management
- PPC optimization
- Occasional listing improvements
That’s leverage.
Step 5: Drive Traffic (Optional but Powerful)
Most sellers rely purely on Amazon traffic.
But smart operators:
- Build a simple landing page
- Collect emails
- Run external traffic (TikTok, Instagram, Google Ads)
- Build brand equity outside Amazon
- Utilise Amazon SEO services to get traffic from Google
Why?
If Amazon suspends your listing, your income disappears.
Owning audience = long-term passive stability.
Step 6: Reinvest Profits to Compound
Passive income isn’t one product.
It’s:
- Product 1 → Funds Product 2
- Product 2 → Funds Product 3
- Build a small portfolio
5 products doing £1–2k profit monthly each = serious recurring income.
Realistic Numbers (Example)
Let’s say:
- Product sells for £25
- Landed cost: £6
- FBA fees: £5
- Ads: £4
- Net profit: ~£10 per unit
Sell 500 units/month = £5,000 profit
After initial setup, your involvement:
- 3–6 hours/week managing ads + inventory
That’s leverage.
Common Mistakes That Kill “Passive” Income
- Chasing viral products
- Underestimating Amazon fees
- Poor supplier negotiation
- Ignoring cash flow
- Not protecting your brand
This is a business. Not a dropshipping fantasy.
Is It Truly Passive?
Not at first.
Year 1 = Active build phase
Year 2+ = Systems + automation
Once you:
- Have supplier relationships
- Dial in ads
- Automate reordering
- Outsource customer messages
It becomes semi-passive recurring income.
Bonus: Expand Beyond Amazon
Once stable, you can:
- Launch on Walmart Marketplace
- Sell on Shopify
- License your product
- Sell the entire brand (3–4x annual profit multiple)
Many Amazon brands eventually exit for six figures — or more.
Creating passive income through Amazon is not about “easy money.”
It’s about:
- Identifying demand
- Building systems
- Using Amazon’s infrastructure
- Compounding profits
If you treat it like an asset — not a hustle — it can become one of the most scalable digital income streams available.