Marketplace Briefing: 5 takeaways from e-commerce company Pattern’s IPO filing

Bloomberg reported the IPO could raise about $400 million. The IPO follows a 2021 funding round where Pattern raised $225 million at a $2 billion valuation led by investment firm Knox Lane.

Founded in 2013, and originally known as iServe, Pattern describes itself as an “e-commerce accelerator” that helps brands navigate Amazon and other global marketplaces. But its core model is simpler: It buys wholesale inventory from brands and resells it online. Pattern also provides brands with certain services that support its resale model, including logistics, fulfillment, product listing, advertising and more. Pattern’s IPO filing does not break out what percentage of revenue comes from its various services.

Pattern’s public debut is a milestone for the Amazon seller ecosystem, which has seen both soaring valuations and spectacular failures for Amazon-centric businesses. The company’s ability to show profitability could help convince investors that Amazon remains a viable channel for building a durable business. Still, there are risks with going public — namely, Pattern’s dependence on Amazon, slim profit margins and reliance on brand relationships it doesn’t own.

“At the end of the day, they ultimately don’t own any of these brands,” said Juozas Kaziukėnas, an independent e-commerce analyst. “Once exclusivity expires, the brand can take their products and sell it themselves on Amazon or sell it through a different reseller.”

Below are the top takeaways from Pattern’s IPO filing.

1. Growing revenue and profitability 

Pattern posted $1.8 billion in revenue in 2024, up from $1.36 billion in 2023 and $991 million in 2022. Net income reached $68 million in 2024, marking the company’s first full year of profitability. That sets Pattern apart from many marketplace-reliant peers, like Amazon aggregators, which have struggled to turn growth into sustainable earnings.

Still, like many e-commerce operations, Pattern is operating on thin margins. For instance, Pattern had a net margin — representing a company’s profitability as a percentage of revenue after all expenses have been deducted — of 3.8% in 2024. Pattern shows modest but improving profitability, with margins in line with major e-tailers like Amazon. Amazon’s retail unit has a profit margin in the mid-single digits. But notably, Amazon’s overall net margin is elevated by its high-margin AWS and advertising units.

2. Heavy reliance on Amazon

Although Pattern touts that it sells on more than 60 global marketplaces in over 100 countries, 94% of its revenue in 2024 came from Amazon, primarily its U.S. marketplace. That concentration is a significant risk — which Pattern acknowledges in the filing — given Amazon’s frequent rule changes and history of squeezing sellers. 

According to Rick Watson, the founder and CEO of RMW Commerce Consulting, scaling the business with Amazon as Pattern’s primary revenue stream will be challenging as the platform hikes fees and alters policies. “It will be very hard for [Pattern] to make more money from sellers,” he said. “There’s not that much margin to go around.”

Like many Amazon sellers, Pattern has found additional growth leaning into faster-growing channels than Amazon, such as Walmart Marketplace. On August 21, Walmart reported that its global e-commerce sales grew 25%, led in part by the company’s third-party marketplace. Looking ahead, alternative marketplaces like Walmart, as well as international expansion, could be “a big opportunity” for Pattern, Watson said.

3. Brand retention but concentration risk

Pattern boasts deep relationships with brand partners: Eighty-seven percent of 2024 revenue came from partners retained for over a year, and 48% from partners of more than five years. Yet the filing notes that two brands together account for more than 10% of its revenue, which exposes Pattern to risk if one were to leave. 

“If ever large brands left, that would create a massive void in their revenue,” Kaziukėnas said.

4. Comparisons to failed peers

Pattern’s IPO filing comes against the backdrop of similar companies in the Amazon ecosystem that have collapsed under mounting losses.

For example, Pharmapacks used to be one of the top Amazon sellers, generating more than $500 million in annual sales. But the company filed for bankruptcy in 2022, and its SPAC deal collapsed after it failed to secure additional financing. The company was a reseller of health, personal care and beauty products, and it ranked as a top Amazon seller for nearly a decade, according to Marketplace Pulse. 

Similarly, Kaspien, previously known as Etailz, shut down in 2023 following years of losses and declining revenue. Pattern’s profitability offers a contrast, but it underscores the precarious economics of third-party sellers and may impact investor appetite for new Amazon sellers.

“Investors will have the precautionary tale of Pharmapacks and Kaspien in mind, but Pattern is operating in a more prudent way than than those other examples had,” said Nate Jackson, managing director at Two Roads Advisors, an investment bank that advises marketplace brands and software companies on acquisitions, capital raises and corporate strategy. He added that Pattern is “disciplined” on bottom-line results and focusing on “higher-ticket items.”

5. Technology-driven growth strategy

Pattern pitches its AI-driven platform as a competitive differentiator. The company claims it has amassed 46 trillion data points, growing by 100 billion per week, to optimize pricing, advertising and fulfillment for brands. Pattern also says it employs around 400 software engineers and builds much of its technology in-house. 

In its filing, Pattern described this as a “flywheel effect”: The more data it collects, the more precise its insights become, which in turn helps it win new clients and expand existing relationships. The company said its average cost to serve brand partners has declined as a percentage of revenue for three straight years, a trend it expects to continue as it grows internationally.

What I’m reading

• Shopify tightened its rules against “hateful content,” prohibiting the sale of racist and other discriminatory merchandise on its e-commerce platform, per Bloomberg.
• Shopify has enhanced its shipping and fulfillment capabilities, now integrated with major carriers like FedEx, DHL, UPS and USPS, to better serve merchants with faster processing, per Retail Brew.
• Faire, the e-commerce startup once valued at $12.6 billion, is now projecting $500 million in revenue for 2025, per The Information.

What we’ve covered

• Amazon quietly blocks AI bots from Meta, Google, Huawei and more
• Walmart is testing a new way to show off products from third-party marketplace sellers in stores
• Resale is winning in the tariff economy — here’s how ThredUp, Depop, OfferUp and Goodwill plan to keep shoppers coming back