Overview

In episode #178 of the Helium 10 podcast, Marco Schoch, founder of Alcube, recounts how his Amazon business vaulted to roughly €10 million in annual sales before spiraling toward near‑insolvency. The rapid ascent was undone by cash‑flow gaps, soaring ad spend, and tighter financing from Amazon. Sellers should study this case to understand how unchecked growth can erode profitability and threaten survival.

Key Points

• Peak revenue — Alcube generated about €10 million in a single year on Amazon before the crisis began.
• Liquidity shortfall — Most of the sales revenue was locked up for up to 30 days due to Amazon’s payout schedule, leaving the company cash‑poor.
• Ad spend surge — Daily Sponsored‑Ads budgets jumped from roughly €2,000 to over €8,000, compressing margins dramatically.
• Reliance on Amazon credit — The business leaned heavily on Amazon Lending, and when repayment terms tightened, debt service ballooned.
• Supply‑chain hiccups — A key Asian supplier halted production, creating a 15 % inventory shortfall and incurring €30,000 in late‑delivery penalties.
• Missing safety net — No reserve was kept to absorb seasonal dips or unexpected expenses, amplifying the financial shock.
• Margin collapse — Gross margin fell from around 12 % to below 5 % as costs outpaced revenue.
• Rapid product rollout — Twenty new SKUs were launched within three months, each demanding upfront inventory and marketing spend.

How the Downfall Unfolded

1. Aggressive product expansion — Alcube launched 20 new items in a quarter, immediately allocating large portions of the budget to advertising and inventory; the first week of the rollout cost €150,000 in ad spend alone.
2. Cash‑flow gap emerges — Because Amazon delayed payouts for up to 30 days, the company secured a €250,000 short‑term loan to keep production lines running, increasing financial risk.
3. Advertising costs explode — Daily Sponsored‑Products expenditure rose from €2,000 to more than €8,000, pushing the Advertising Cost of Sale (ACoS) past 30 % and slashing net profit margins.