Passive Income with Shopify for Minimalists

Passive Income with Shopify for Minimalists

Click here to read the first part of this series about personal finance for minimalists.
The topic of today’s article is how to generate passive income with Shopify, and two general approaches we can take to use it to build our stream of passive income. We have a lot to cover so let’s jump straight in!

As I mentioned in the previous article, in very broad terms shops can be of two type – where you either sell your own products or sell someone else’s products (leveraging dropshipping or affiliate marketing). If you already have a product you could sell – this is great. It’s always easier to sell your own products, because you already know the background, you are interested in the niche yourself and probably know a bit about the target audience.

Shopify store

Sell your own products

Let’s say you’re a photographer and you’ve been selling some prints to your friends. Now this would be difficult to scale – both in terms of just spreading the product info by word of mouth and also scaling up the actual production. You probably would like to spend your time on taking photos and refining your photography skills. Instead you’d spend a lot of times dealing with printing, framing, shipping, handling returns and all other parts of the fulfilment pipeline.

Here’s where Shopify steps in. First off, I should mention that this is not difficult. A lot of people think that setting up your own ecommerce store is only a realistic task if you’re a web developer or have IT education. This, fortunately is not true these days. If you can handle sending email with Gmail, then you can do 90% of the tasks.

Of course you can do advanced theme customizations or fancy integrations with 3rd party services, but you don’t need any of this to run a successful store.

In very general steps this is what you need to do:

  • Sign up for a Shopify account (first 14 days are free, no credit card required, no risk), I recommend getting the “Shopify” plan instead of the “Basic Shopify” plan if you’re serious about it (this will give cheaper rates, which means your margins are bigger and Abandoned Cart Recovery, which is really useful)
  • If you’re selling prints/posters, tshirts, mugs, home decor, phone cases, then sign up for Printful (this is a free service that will create your tshirts (or whatever your product is) and ship them to the customer. Their service is amazing! You don’t need to deal with fulfilment, you can be the creative who comes up with ideas.)
  • Upload your products, add product pictures and information (you can use Printful’s mockup generator if you don’t have your own product photos). Then add prices.
  • Set up payments with credit card and/or Paypal. This is very easy to do from Shopify admin panel. My grandma could do it and she’s 90!
  • Share your store with the world. You are also offered to get a domain – I suggest to use this offer. It will make your store look more legitimate and helps with search engine optimisation (SEO), which in turn will get more organic (meaning “free”) traffic.
  • Share your site with friends and family. If you have budget also promote it using Facebook Ads – this is highly recommended. You can already get good results with 5USD/day budget
  • Don’t give up after 3 days if you’re not a millionaire. Getting traffic going and gathering enough interested buyers. Rule of thumb – make your first sales in the first month, break even at second month. From about 3rd month you should start seeing recurring profit with very little extra effort. Now kick back and enjoy!

shopify

Sell someone else’s products

The second option is to promote products by someone else. The majority of work here comes down to advertising and targeting your audience. Facebook Ads gives very good tools for doing this, and again with budget 5USD/day, you can already do wonders.

Most common approach is to pick a niche or set of products, build a store around it and then promote either the whole store or specific products using either Facebook Ads or Google Adwords.
As dealing with the fulfilment of these orders can be somewhat messy, most people do something called “dropshipping“.

Here’s a general definition of dropshipping by the nice people at Shopify:

Dropshipping is a retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product.

The biggest difference between dropshipping and the standard retail model is that the selling merchant doesn’t stock or own inventory. Instead, the merchant purchases inventory as needed from a third party – usually a wholesaler or manufacturer – to fulfill orders.

It’s worth noting that Shopify has nothing against dropshippers, it doesn’t conflict with their policy – actually the opposite is true, they are promoting this approach.

There are several reasons why dropshipping approach is the best way to start with Shopify. Here’s a couple:

  • Easy to get started (no worrying about fulfilment, packaging, tracking, returns)
  • Small starting capital requirement (as you don’t stockpile the products, then you can spend all the budget to advertising (in case you choose to do paid ads) and Shopify subscription
  • Almost infinite selection of products
  • Easy to scale up (as you start getting more orders, you can spend more on advertising, which will in turn increase the amount of orders even more)

This is the beauty of generating passive income with Shopify.

There are two downsides that I have encountered – if your supplier is outside of the US and most of your clients are in the US, then shipping times can be quite long – up to 14 days. The other – relatively low margins compared to selling your own products, that are more unique. I should mention that the margins depend heavily on which category and price range of products you are selling.
Personally as a general rule I’d avoid selling anything that’s under $10.

A very common approach is to find products from Aliexpress.com and sell them for a hefty profit. There are some niches that have become very saturated and I’d suggest avoiding – watches is one good example.

Shopify dashboard

Here’s a general approach I would take:

  • Sign up for a Shopify account (first 14 days are free and no credit card needed), I recommend getting the “Shopify” plan instead of the “Basic Shopify” plan if you’re serious about it (this will give cheaper rates, which means your margins are bigger and Abandoned Cart Recovery, which is really useful)
  • Install Oberlo plugin when logged into Shopify (See how Oberlo works in the video below)
  • Find products to sell (also do research what products are already sold a lot – these niches might be difficult to compete in and profit margins may be smaller)
  • Import products to your store using Oberlo
  • Set up payments with credit card and/or Paypal. This is very easy to do from Shopify admin panel. My grandma could do it and she’s 90!
  • Share your store with the world. You are also offered to get a domain – I suggest to use this offer. It will make your store look more legitimate and helps with search engine optimisation (SEO), which in turn will get more organic (meaning “free”) traffic.
  • Share your site with friends and family. If you have budget also promote it using Facebook Ads – this is highly recommended. You can already get good results with 5USD/day budget
  • Don’t give up after 3 days if you’re not a millionaire. Getting traffic going and gathering enough interested buyers. Rule of thumb – make your first sales in the first month, break even at second month. From about 3rd month you should start seeing recurring profit with very little extra effort. Now kick back and enjoy!

Paid Advertising

We mentioned promoting your store using paid advertising in this article more than once. This may sound frightening or you might think you need a big budget. In reality neither is true. As we said above you can already to wonders with a budget of $5 per day, and you don’t need to run ads every day.

The best way for a beginner to approach paid advertising is Facebook Ads. This in itself is a huge topic that could warrant a whole article series about it, but there are several good resources on this available online already.

To get started, here’s a completely free ebook about Facebook advertising, specifically related to Shopify stores. Click here to download the book in PDF format.

Conclusion

These were the two different approaches to build passive income with Shopify. We have tried both of them and can confirm that they works. Also as you can see from the lists – there’s quite a bit of overlap between these two paths.

Whichever one you end up choosing there are two thing to keep in mind:

  • Start now – this was quite a general guide and you can go much more in depth. So much indeed that you keep reading and reading, but never take action. This is the most common mistake and most people never actually start. Our recommendation is this – start now, do everything that’s suggested here and keep making iterative improvements to the store. The best way to learn is by doing.
  • Persistence is key – don’t get discouraged if you’re not a millionaire next month. It takes some time to get the ball rolling, but once you do, it’s easy to scale up. It’s important to start now and not give up.

To get started sign up for Shopify today – they have a 14 day free trial if you click here. No credit card needed.
We hope you put this info to action right now and start seeing results really soon!