Marketplace Briefing: Why e-commerce firm Pattern went public — and how it plans to spend $300 million in IPO proceeds
This is the latest installment of the Marketplace Briefing, a weekly Modern Retail+ column about the ever-changing e-commerce marketplace landscape. More from the series →
When David Wright’s cousin started a small children’s accessories brand on Amazon more than a decade ago, he noticed there was a “formula” to growing successful brands on online marketplaces. That sparked an idea. Rather than create a consumer brand of their own, Wright and his wife, Melanie Alder, realized they could build a business that helps online merchants succeed on Amazon and other platforms.
Twelve years later, the company they co-founded, Pattern, has entered the public markets with a $300 million initial public offering that valued the Utah-based firm at roughly $2.5 billion. It’s a debut that has revived questions about whether companies built largely on Amazon and other marketplaces can deliver durable growth as public companies.
Originally known as iServe, Pattern’s core model is that of a reseller: 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. The company bills itself as an “e-commerce accelerator” for brands.
Over the past decade, Pattern has grown from focusing solely on Amazon to selling a wide range of products, from beauty to consumer electronics, on more than 60 marketplaces worldwide on behalf of over 200 brands. Some of its brand clients include Spanx, Panasonic and Skechers. Today, Pattern ranks as Amazon’s No. 2 seller in the U.S., based on the number of customer reviews, according to research firm Marketplace Pulse.
By going public, Pattern joins a rare group of Amazon sellers to test Wall Street’s appetite for a sector that has delivered soaring valuations and equally sharp downturns. 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. As a public company, Pattern says it will focus on scaling its AI platform, hiring fresh talent and expanding beyond Amazon into new global and marketplace channels.
Pattern will split the proceeds from its IPO evenly between the company and existing investors. Wright said Pattern didn’t necessarily need the capital for operations — it had $215 million in cash and no debt, as of the second quarter — but going public was critical to retaining and attracting talent as Pattern invests more in AI to advance the business. With 400 in-house software engineers working on pricing advertising algorithms in-house, Wright said Pattern has increased its R&D budgets by 45% this year on AI-related investments.
“We have this two or three year window where we’ve got to be able to attract talent like a Google can,” Wright said.
In a prospectus to investors, Pattern pitched 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. In its IPO 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.
The company is earmarking part of its IPO proceeds to invest more in agentic technology — that is, using AI agents to automate the brand’s global operations.
Some analysts are skeptical that Pattern’s AI technology platform will tangibly translate into higher sales. While Pattern highlights it tech and AI capabilities, at the end of the day, it’s fundamentally a reseller business, according to Juozas Kaziukėnas, an independent e-commerce analyst.
“You figure out how much units you need in your warehouse, ship them, you sell on Amazon, and you repeat,” Kaziukėnas said. “The more complexity you add, it just adds costs that do not always translate into a bigger business.”
Pattern has achieved steady growth — revenue rose 39% year over year to $598 million in the second quarter — but the company remains deeply tied to Amazon. Ninety-four percent of its 2024 revenue came from Amazon sales, but Wright said that concentration risk is unavoidable. While Pattern is growing on other marketplaces, there is no way to fully protect against Amazon policy changes. As Wright put it, “[Investors] have to decide, ‘Hey, is this a space I want to play in?'”
Still, Wright said that marketplace expansion is a growth priority for Pattern, especially platforms like TikTok Shop. “It’s the first time in a decade where I think I’ve seen real, genuine interest from brands to win on a marketplace that is not Amazon in the U.S.,” he said about TikTok Shop.
He added that Pattern’s reliance on Amazon is less of a vulnerability than it may appear because the e-commerce giant dominates online shopping. Amazon captures about 40% of the U.S. e-commerce market, according to eMarketer. “We’re just following where consumers are,” Wright said.
The company is investing part of its IPO proceeds in global expansion, including recently opened offices in Seoul and, soon, Japan. “Oftentimes, we will try to acquire a small consulting-type company that is e-commerce in, say, South Korea, that knows and understands the marketplace well enough that they can help us build the tech to run that machine in the language,” Wright said.
Pattern’s IPO filing comes against the backdrop of similar Amazon sellers that have gone public and then 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. Similarly, Kaspien, previously known as Etailz, shut down in 2023 following years of losses and declining revenue.
But Right said Pattern’s technology platform insulates it from the pitfalls of those companies.
“We’ve signed 70 brands on just our [software-as-a-service] year to date,” Wright said. “We do inventory as a byproduct of the platform. We don’t do inventory first.”
What I’m reading
- The FTC accused Amazon of tricking nearly 40 million customers into free Prime trials and then making canceling too hard — a charge a jury will rule on this week, per The Wall Street Journal.
- Shopify took down a website template after influencer Molly Baz said it looked like a “sicko AI version” of her cookbook cover and was made without her permission, according to Business Insider.
- Shein opened its supply network to other fashion brands, offering access to its logistics and production capabilities in a move to expand its business and support growth in the competitive fashion industry, Bloomberg reported.