When it comes to generating revenue, particularly online, there are two main types of approaches: active and passive. Active systems only bring income when someone is actively producing new products or providing a service, while passive ones continue to generate revenue on their own once they are established. In addition to creating a profit even when you aren’t working, passive systems do so while freeing up time for other, more compelling pursuits.
This is an ideal that many pursue, and there is a wide range of methods that individuals have successfully used to create passive income — stock market investments, digital products such as e-books, affiliate marketing, and advertising programs. Private label products are another passive income stream that involves an agreement with a manufacturer where another company sells the products that they produce, but under the second company’s name and brand.
Private labeling comes with several advantages that make it an ideal source of passive revenue, as well as a popular one. In 2018, these products generated at least $129 billion in sales — and their influence in the market continues to grow [1]. Here are several reasons that private label products can be an effective way to add another passive stream to an income portfolio.
1. Set it Up and (Mostly) Forget It
Like many other forms of passive revenue, all the work needed to see revenue from a private label products business happens at the very beginning. It will take some time to research the types of products to offer under your brand, find the right manufacturing partners, and choose and set up the sales platform — but after that is accomplished, most of the new income stream can be automated to continue on without daily attention. Of course, to get the best results, it’s important to monitor sales of the items and make adjustments to product lines as the market changes, but there are many tools to facilitate this process as well.
2. Tools to Help You Get a Quick Start
Another benefit to getting started in private label products is the wealth of experience and resources that exist within this niche of the retail industry. Instead of spending time discovering through trial-and-error what works best, private label sellers can take advantage of the information that already exists to make the decisions that will result in earning a profit much more quickly. From software that helps with finding the right products to tools like Google Keyword Planner that identifies the best ways to advertise those items, online resources can help bring success right from the start.
3. A Simple Third Party Solutions for Packing and Shipping
Amazon is one of the platforms that is most commonly associated with private label products for good reason. By far the favorite destination of online shoppers, the site brings in more than 49% of e-commerce sales [2] with its wide range of products and the added benefit of free Amazon Prime shipping. The online retail giant also has advantages for private label entrepreneurs — using Fulfillment by Amazon (FBA), products can be stored, picked, packed up, and shipped by Amazon [3]. With these services, the seller can deliver a better experience to buyers while having more time to dedicate to other aspects of the business, or even other pursuits.
Private label products are just one of many ways to generate income passively, but the advantages and resources in this system make it one of the most convenient to start. With some work on the front end and assistance from the right tools, a seller can quickly be up and running with a full store of private label items on your website or a platform like Amazon, watching as the sales come in.
[1] https://plma.com/storeBrands/facts2019.html↩
[2] https://techcrunch.com/2018/07/13/amazons-share-of-the-us-e-commerce-market-is-now-49-or-5-of-all-retail-spend/ ↩
[3] https://services.amazon.com/fulfillment-by-amazon/benefits.htm↩
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