Peter Luxenburg is an entrepreneur and the Project Director at FROST Limited, a Hong Kong-based Amazon coaching and consulting firm. In this interview, we discuss the feasibility of selling on Amazon, how you can be successful as an Amazon seller, and the basics of setting up Amazon seller account.
Stick around to find out what he had to say, and thank you for joining us.
- Setting up an Amazon Seller account can be difficult, but you need to persevere
- Amazon selling is not a way to make easy money, but it is still a good opportunity if you’re in it long-term
- A seller needs to market, optimize, and research the market
- Choosing and patenting a brand name on media and a website is necessary for driving traffic
- Defend the sales you have and invest in growth
- Explore a variety of marketplaces and external traffic sources
- You should try your best to avoid negative reviews – instead of merely looking for positive ones.
- Don’t try to do everything yourself, outsource tasks to VAs
- Focus on the essential parts of your business
Welcome to the show, Peter. How are you doing?
Thank you, sir. Thank you for having me. I’m doing good.
Where are you right now? Are you based in Hong Kong?
That’s correct. I’m typically based out of Hong Kong, but due to the pandemic situation, I am in China and Hong Kong.
Interesting. For sellers who are not familiar with you and your business, could you briefly explain what you do?
I run a coaching and consultancy agency in Hong Kong for Amazon centers. We focus on entrepreneurs, small and medium businesses that aren’t on Amazon, or are just starting on Amazon. We offer services not only to people in more companies in Hong Kong but all over the world.
Who are you typically serving? Is it more experienced sellers or beginner Amazon sellers?
I would say more companies or people that try to do it by themselves on Amazon but don’t seek help in the beginning. Once they kind of get stuck somewhere, they often end up coming to me for help. Sometimes they need a little push, and sometimes they just want a long term partner who can walk with them on this journey.
You said that most sellers are stuck on something when they come to you. What kind of problems can those typically be in the very beginning?
Actually, just getting the Amazon seller account set up is getting more and more difficult for companies or people. They need to set up an Amazon seller account on all the marketplaces that belong to Amazon. The sellers commonly get stuck on the paperwork, and that helps them understand that there are these small, tiny details that can kind of be a problem for them. I help them with all that all the way to making their first listings. We show them how to get around doing the proper keyword research to create SEO friendly content that would attract some traffic.
It’s actually funny that there’s this paradox because I’m not a seller myself. I do sell Kindle books on Amazon. But when I wanted to create an eCommerce business on Amazon a year ago, I found setting up an Amazon seller account so tricky. I couldn’t get my paperwork published for some reason. I was getting rejected all the time, so I just gave up the idea. On one hand, Amazon is like E-commerce and training wheels. It’s straightforward for new entrepreneurs to get into the space using Amazon because Amazon just gives you traffic. On the other hand, they make it so difficult with all the paperwork and bureaucracy.
Why do you think that is?
Probably because of all the rules and regulations and laws. They can lose a lot, so they need to make it right from the beginning. Amazon can even say no to a big center just to be on the safe side. I can give you an example. I had a charity as a client. Now, a charity has a very complex owner structure. There’s a lot of trustees, so it’s not as straightforward as registering there. You have to have an account with a company where you show who’s behind, who’s a shareholder, and who’s the beneficiary owner. Charities consist of a lot of people, and most people come and go. When you want to verify your Amazon seller account, you have to prove your residency home address, prove your bank account, et cetera, et cetera.
That was probably the hardest nut to crack for me. It took almost five months to get that Amazon seller account verified, but I didn’t give up. That’s what I always tell my clients, too- don’t give up. Be persistent. We will get through this. Amazon actually wants you to successfully open the Amazon seller account, you just have to go through this. These complicated procedures have a lot of work but just imagine how many people want to register. If you’re serious about it, you should persevere. Or else, why did you start in the first place?
You probably get this question a lot, and it’s on everybody’s minds. Is Amazon FBA still a viable option in 2020 for eCommerce entrepreneurs?
Definitely yes, although you should not put all your eggs in one basket. However, I still think that it’s the easiest and fastest way for a new brand (or for an existing brand with a new sale) looking for a new sales channel to get exposure immediately and get sales.
You’re talking about brands, right? But what about entrepreneurs who don’t have brands? It seems to me that there were certain waves of Amazon over the past decade. The first wave was where you could just basically do arbitrage, right? So buy for cheap from Chinese sellers and sell for a markup in the U.S. where you can market. Is that still an option for new sellers trying to get their feet wet in eCommerce and open an Amazon seller account or not? Or do you think the Amazon space is for more experienced sellers and a stale opportunity for new sellers?
It’s just that you have to find a way to differentiate from existing offers and attract customers. There are many more centers now than there were four or five years ago, and since Amazon opened up. Things got harder with the opportunity for Chinese manufacturers to sell directly to consumers on Amazon. So it is difficult to make a quick buck where Amazon is concerned. You have to picture where you want to be one year from now and see how you can make money in the long run.
I think that most people see an opportunity and think, “wow, I have an idea. I can go out there and buy some products directly from the factory and just sell them”. That doesn’t last very long because there are too many people looking at you or looking at all the new prices coming up and they do the same. I think they’re called Me-Too products.
If something sells a lot, then everybody else jumps on it. If you differentiate and look in the long term, there are definitely chances for new players to come in. I mean, I agree with you because there’s so much competition right now. It’s so easy for your competitors to dominate the price points. You have to be very data-driven about your business and your products. That’s one of the things that we have experts who do the unit economics analysis help with. We help sellers gain a competitive edge. Because if you’re not data-driven right now, you’re practically running your business blindly. And if you run your business blindly, you end up losing money.
Speaking about new sellers, what learning curves do people have to educate themselves with if they decide to get on this train to success via Amazon FBA? What’s essential to learn before you launch your first product?
Also, I think what you were mentioning about the data and algorithms, deciding what matches the search results is very important to understand the Amazon platform and how it works. It’s all about ranking, right? How can you show up? How can you know what affects the ranking?
Learn everything about different traffic sources and how important they are to drive external traffic.
This is apart from the obvious things like making an optimized listing, of course. It all comes down to traffic. You can have an optimized listing, but as long as you don’t have traffic, it doesn’t matter. So it’s essential to learn how ranking works and get tools that help you. That’s some of the things that I think are essential and things that you should pay attention to before getting a product on time.
You mentioned tools that you have to have in place. What kind of stack of tools should an Amazon seller have in their pocket?
Some fundamental tools show you search volumes of traffic. They help you understand what products sell on Amazon and what makes those products sell. You need to learn your competition because you’re not coming to Amazon with a product at the end of the day. You create a new category or a new market. The seller’s already there with their Amazon seller account. The size of the market is there. You just have to get in there and get a piece of that cake. You have to go after those who have the sales and understand how you can get the traffic and dominate those product pages. Also, You have to figure out how you can show up as an alternative option to those currently existing offers. Besides marketing and optimization, which is essential, sellers can also use tools like Jungle Scout to estimate demand.
Getting your Amazon seller account is not enough. Very few sellers understand their cash cycle and the fact that their product is an investment. Are you getting any ROI? Even our first user at the sellar scale told a story about his client, who was selling $40,000 per month. However, before he plugged his numbers into an Excel table or seller scale or any other software products, he didn’t realize that he was losing money. He was making 40,000 in revenue. But because of all the fees and all the marketing span, and because he didn’t understand his cash cycle, he was losing money. I think marketing is important, but understanding the fundamentals of your business cash cycle is important too.
You mentioned that you have to understand marketing in a much bigger picture than just Amazon, right? So I wonder what assets are essential to have in place before you start selling? Is it social media accounts? Do you need to have an email newsletter? Do you need to have a Shopify store when you sell on Amazon?
When I started, I didn’t begin with arbitrage or any other business model. I jumped into private labels immediately when I started selling back in 2014. I was looking to sell some products quickly. Before deciding which category I should focus on, I worked out a brand name because I knew I would be in this space for a few years. It was essential to figure out what brand name was suitable for my preferred category. Was that brand name available on all social media channels? What about the domain name available? Was the trademark available on the marketplaces where I wanted to sell? I came up with a bunch of different brand names that I wanted to use and then tested them.
I checked everywhere. Used some tools to check whether the social media channels were available, the domain, the trademark, etc. Eventually, I found something that had not been used and had everything available, and I jumped into it. So I think it’s important to take command or ownership of those channels. I don’t think you would need to work on them immediately. That is, apart from your website, which could even be one page, in the beginning. It is just supposed to work as a social proof for consumers if they look you up on Google. I would say the most crucial step is to set up a website and make sure that the trademark is available. Then slowly start to populate and work with people that can help you with social media on those channels.
It’s smart to own your assets. You may not go on social media at the very beginning. You may even want to focus on Amazon for the first couple of years. But at some point, you will want to have this source to drive external traffic. And if your name is taken, then you don’t want to deal with the lawsuits or whatever else problems ensue.
I agree with you. And I mentioned Shopify, right? It’s a question that we get asked a lot as well. We live in a platform dominated world. You have Amazon, eBay, Etsy, Walmart, all of these different marketplaces. So should sellers, whether experienced or new, even focus on building their own Shopify store at the same time while selling on these platforms? What do you think about that?
Yes. I think it’s an excellent idea. Spread your wings, diversify your sales channels, but don’t start with that. Focus on getting traction and sales on Amazon first.
However, there are times when there are delays, or Amazon has problems with fulfilling orders so you cannot sell the stock. In that case, people who have a Shopify store are better for it. And those who didn’t have to rush to register a Shopify site. If you look at the statistics, Shopify has so many more registrants now than they had in previous months. I’m not saying that, God forbid, this kind of condemning comes and puts us in a tricky position. But there are still people that refuse to want to buy on Amazon. They want to buy our products, and they don’t want to buy on Amazon. Then if you have yourself a Shopify store or an eCommerce site, you get more sales.
That’s good. Let’s talk about your work for a minute if you don’t mind. Judging from your experience of working with different clients, when it comes to experienced sellers, what are some of the most common low hanging fruit opportunities or mistakes that they can crack? What kind of errors do you see most often with the experienced sellers you work with?
Hopefully, experienced sellers have learned from their mistakes and are not making too many of them. If you come to a certain level, you must defend the sales you have. You assert your visibility. You have to continue to invest in marketing, continue to grow, and try to grow the business even if you don’t achieve growth. That extra effort that you put in would at least hopefully defend your current sales. It is getting more and more expensive to sell on platforms like Amazon. The competition increases and the profits are going nowhere. You need to stay on top of things, focus, and reinvest in both money and personal resources.
Right. And how do you do that? I mean, how do you invest the money? Do you seek external financing? Do you invest in advertising as an investment?
Continue to grow your product range. Reach out to more customers, and that might include seeking external financing from the bank or some institutional or private investors. I think continuing to focus on growing your brand and your products to reach out to more customers is necessary. More products mean more advertising. So there’s another cost of repair.
You understand it more than most people that reviews sell, right? When you have good reviews, four or five-star reviews, things are going great. People are buying your products, and people are reviewing your products, giving positive feedback. But what do you do when you have a one-star review? How do you deal with those?
There’s not much you can do. I mean, Amazon is taking away an opportunity of getting in touch with this client.
I would typically try to forget it. Of course, I would come and try to figure out who the customer is. But I know that it might not work out even if you find the customer, start a dialogue, resolve the problem, and give them more than they expect. They might remove the one-star review, or they may be lazy or just not want to. Bury the one or two-star review with new five star reviews that are fresh and ready to take the spot as soon as possible. Focus on the positive things. Forget about the negative.
Speaking of one-star reviews, we had one guest come to the show. Daniella from Mindful Goods told her interesting story of how she was using the negative reviews of her competition as points of differentiation. You go to your competitor’s listings, you see one-star reviews, and then you try to build on them and just improve your product based on the one-star reviews.
I ordered something on Amazon recently, though I forget what, and I was so angry about a delivery that I left a one-star review, and the seller reached out to me by email. I don’t know how he did that because I didn’t even know that I had my email open on Amazon. He reached out to me and he just asked, “please, please, please remove the one star review”. And I did that because I’m a nice guy. But this kind of stuff happens.
Yeah, there’s a lot of scouting and detective work to try to figure out who left you a one-star review. There are different methods to do it, but it becomes harder and harder and almost like harassment sometimes.
Right, right. You mentioned methods. What are some of the ways that you can use to attract one-star reviewers?
It depends on the kind of profile they’ve set up on Amazon and how much they reveal. You can go through the Amazon profile, figure out the name, try to go through your order list, and then try to find them on Facebook or other media where they have the same name. Often you don’t meet the right person, or you’re maybe not targeting the right person, but one of these might work if you’re lucky.
Just to close off the conversation about reviews, it’s kind of like a catch 22 in the very beginning because when you don’t have sales, you don’t have reviews. If you don’t have reviews, you don’t have sales. What’s the initial strategy behind amassing these real, high-quality Amazon reviews?
You have to provide a fantastic product that is much better than people expect to get. That will give them a first positive impression. Then just have a very passive communication with them where you just try to establish a connection with them. That might be through inserts or follow up emails if you have the possibility.
Personally, my main objective when working on a review strategy is not to get positive reviews, but to avoid getting negative reviews. One star or two-star reviews can destroy a business. If you go out and jump on a listing and it doesn’t have reviews, there’s nothing bad said about it, and nothing good said about it. The customer can still understand that this is a new product and if they find something good about it, they buy it. But if there’s one negative review and it’s the first thing that comes up, that puts your whole business at risk.
Absolutely. Besides running an agency, you are currently running your private label businesses, is that right?
I actually sold my private label business back in 2018. I’d built it for three years, and when I sold it, my first idea was to repeat. I wanted to create another brand in another category and do the whole thing again. But I ended up finding myself spending much more time helping others. So began my little journey. Everyone started to know me as this guy who knew everything from product sourcing to product opportunity, finding to building a brand, and having the supply chain. I had all the logistics in place to sell the brand.
Got a lot of inquiries, and it took up so much time that I didn’t have any time left to focus on a new brand. I also found it much more fulfilling to work with others than to sit in my center and work on my own thing, which I had done for three years. Even though the upside is much smaller or less, I find it much more fun and fulfilling to work as a consultant.
Apart from that, I do have a few Amazon seller account where I do e-retailing. I offer services to companies that don’t want to go into Amazon straight away. They just want to dip the toes in the water. They can use my Amazon seller account while I have a multi-brand store, but they test it out and learn the ropes with me. I am also running my own dropshipping business.
What was the product for the first business that you sold?
It was in the kitchenware category. It started with some simple products like beer openers and quickly expanded into a range of about 55 products.
Wow. One thing that I’m always interested in is the top mistakes that sellers make in their online marketing when they’re trying to scale a business? You had your own private label business, and you’re running an e-retail Amazon seller account, a drop shipping business, you work with clients. You’ve done this a lot, so you must have some thoughts. What are some of the most common mistakes regarding online marketing, listing optimization, ranking on Amazon, and off Amazon promotion?
You can’t do everything by yourself, that’s pretty much impossible. There are just too many things to do. I think a common mistake is that you think you can run your social media marketing by yourself. But to be successful on social media and gain followers and customers, you need to be consistent and provide excellent quality content. Therefore, I think it’s better to hire professionals or use external resources that are specialized to create and schedule your content correctly. So that’s one mistake I think people are making, trying to do everything themselves just to save money.
The same goes for listing optimization. I prefer to do that myself because that decides whether a listing is successful and shows up on search results, etc. It requires a lot of keyword research. I know my products best, I would believe, at least in the beginning. So I know I can create it as well, at least to that 80-20 kind degree, so it gets the most sales it can. But if I want to go on a transformation or go on a different marketplace, I would hire external resources instead of trying to use google translate or something like that. Let the professionals handle those things and add their little edge to them.
Hire external help and a virtual assistant. It took me a long time to find the virtual assistant that helped me with my repetitive tasks. I was hesitant as to how much work I wanted to give away, and if I wanted to spend time training that person. At the end of the day, if you get it working, which is your end goal, it saves you a lot of time and energy.
They do the things that you don’t like to do or things that drain you. Find those virtual assistants that make your day happier. I think that’s the ultimate advice because when you do everything yourself as a seller in businesses or Amazon, you have to put in the time and energy and educate yourself. At some point, you start hitting diminishing returns because you don’t want to delegate. You don’t want to give a part of your business away or don’t want to pay. However, it’s essential if you’re going to grow and scale. ,
That’s great advice. I think that works for a lot of people. You mentioned that you hired virtual assistants. Could you just briefly name places where you look for them? Was it Upwork, Fiverr, or some different resources?
No, I am specific here. I use a site called online jobs PH, which is a platform in the Philippines. I have a bank of VAs I can choose from, and it’s better to hire PAs from the Philippines. You would think I would say differently because of language, but what you get for the money you pay is very reasonable. It’s easier for me to understand their English than it is from other countries. Of course, I use other resources too. I use Fiverr and Upwork too, but those are more for short term gigs or assignments.
What kind of tasks do you usually outsource to VAs?
First, it was just like having a personal assistant. I write notes for my meetings and my clients. Somebody has to work them through and then categorize everything, so they do that. Remind me when I should follow up. You can make a lot of sales and go on a lot of leads, but if you don’t follow up, it’s just a waste of time.
I have an assistant keep track of my schedule and make sure everything is nice and tidy. Reporting, too. Many of my clients require constant reporting biweekly or weekly or monthly, and I set up some SOP so that I can hand that over to my VA. They log into the client’s Amazon seller account, download the data, and formulate and present it in a customer-friendly format so that I don’t have to do that. I did it initially, mostly because I wanted to find out what the best way to present the customer’s account and critical figures are. Once that is set up according to the client, I hand it over to a virtual assistant to kind of do this regularly.
Sounds great. Peter, thank you so much. I have one last question for you, and then we’re done. It’s our traditional question from Peter Thiel’s book Zero to One. What truth do very few people agree with you on? Basically, what is your contrarian view that goes against commonly accepted notions in the industry?
Probably a lot of things. One thing that comes in my mind mainly is, as a salesperson before I got into B2C and eCommerce, I was into B2B sales. One of the reasons I was successful was that I got the order and solved the problems afterward. Many people would not agree with me. They would like to have everything watertight before going to the clients and saying, I can do this. But by then, most of the clients are gone. So my motto has always been “get the order, solve problems after.” I feel like this is better than trying to solve a problem at a time that you don’t know is going to be there.
Focus on the essential, focus on the 80%. You don’t need to give 80% of results right now without the customer. You need to have the customers first. There are so many things that you could be doing, and it’s imperative to prioritize building your business and do that.
One of our guests, Jason Boyce, talked about one of the non-essential things and said that branding is non-essential.
Very few companies can get to the point where branding becomes an advantage for them. A lot of companies stay small, and branding is not essential for them. So yeah, I agree with you. Focus is essential.
You have a 15-minute call for people who want to get in touch with you, right? Could you share a little bit about that?
Yes, definitely. So, if you want to get in touch with me, just have a quick 15-minute call. You can schedule a 15-minute free coaching call to discuss your business or anything you’re thinking about. It doesn’t matter what stage you are in, if you are selling, haven’t started selling, if you’re just in the product stage trying to find product opportunities, or if you are already on Amazon and want to improve your sales. Get in touch with me, and I will try my best to help you.
Do you help with the business in general, or is it mostly PPC optimization? What if someone needs your help in just setting up the Amazon seller account?
I’m a business consultant, so everything that is related to your business.
Interesting. Thanks a lot, Peter.
Thank you. Thanks for having me again.