The e-commerce landscape underwent a dramatic transformation with the rise of the Thrasio model, a business strategy that involves acquiring successful third-party brands, especially those operating on Amazon, and scaling them using capital, technology, and operational efficiencies. Thrasio, the American startup that pioneered this model, experienced a meteoric rise after its founding in 2018. It raised billions, acquired hundreds of Amazon-native brands, and inspired a flood of global imitators.
However, what started as a revolutionary disruption now faces serious scrutiny. Valuations collapsed, many copycat firms shut down, and investors began questioning the sustainability of the model. This article unpacks the rise of the Thrasio model, the market frenzy it sparked, the challenges it encountered, and what the future might hold.
Understanding the Thrasio Model
Thrasio identified a niche in the fragmented world of Amazon sellers. Thousands of small merchants built profitable but under-optimized brands on Amazon’s marketplace. These businesses usually lacked capital, professional management, and operational scale.
Thrasio began acquiring such brands. Its team optimized listings, reduced operational costs, improved advertising strategies, and expanded into new geographies and sales channels. The core idea involved using economies of scale to create synergies across multiple acquired brands. By centralizing logistics, marketing, and analytics, Thrasio turned small operations into larger, more profitable entities.
This “roll-up” model resembled private equity but adapted specifically for the Amazon ecosystem. Thrasio’s speed, data-driven decision-making, and aggressive funding strategy made it a global sensation.
The Boom: Thrasio and Its Global Influence
Thrasio raised over $3.4 billion within a few years, including massive rounds from Silver Lake, Advent International, and others. Its valuation crossed $10 billion at one point. Within three years, it had acquired over 200 brands and achieved profitability—a rarity among high-growth startups.
The success caught global attention. A wave of similar companies emerged across regions:
- Perch, Heyday, and Branded in the U.S.
- Razor Group and SellerX in Germany
- Una Brands and Rainforest in Southeast Asia
- 10Club, Mensa Brands, GlobalBees in India
These companies raised billions collectively. The model promised rapid scaling, portfolio diversification, and a predictable growth path through Amazon’s algorithmic ecosystem. Investors believed in the logic: Amazon’s dominance ensured stable customer acquisition, and the aggregation of profitable brands created an appealing risk profile.
In India, Mensa Brands, led by Myntra’s former CEO Ananth Narayanan, quickly turned into a unicorn. GlobalBees, supported by SoftBank, followed suit. The excitement created a gold rush in e-commerce brand aggregation.
Cracks in the Foundation
Despite the initial success, the Thrasio model soon encountered significant headwinds.
1. Amazon Dependence
The model relied too heavily on Amazon. A minor tweak in Amazon’s algorithm or changes in policy created massive fluctuations in visibility, sales, and margins. Some brands that once thrived faced sudden irrelevance after losing their Amazon ranking.
Thrasio and its peers lacked control over their main distribution channel. Their reliance on a third-party platform weakened their ability to defend against marketplace risks.
2. Rising Acquisition Costs
Initially, aggregators found it easy to buy brands at 2-3x EBITDA. As more players entered the space, competition drove up valuations. Some firms paid up to 6-8x EBITDA just to win deals. The economics began eroding. Higher acquisition costs meant thinner margins and longer payback periods.
In some cases, the acquired brands did not maintain their profitability post-acquisition. Integration challenges, shifting trends, and misaligned expectations hurt performance.
3. Operational Complexity
Managing hundreds of distinct brands proved harder than anticipated. Each brand had unique suppliers, customer bases, inventory cycles, and branding requirements. Even with centralized functions, execution turned chaotic. Quality control suffered, customer service weakened, and brand differentiation got diluted.
Scaling operations required not just capital but managerial depth—something many aggregators underestimated.
4. Capital Tightening
The global macroeconomic environment changed by 2022. Rising interest rates, inflation fears, and a tech funding winter dried up capital inflows. Many aggregators depended on cheap capital to fuel acquisitions and operations. When liquidity vanished, their business models lost steam.
Thrasio postponed its planned IPO. It laid off staff, slowed acquisitions, and brought in a new CEO. Other firms merged, pivoted, or shut down entirely.
Bubble or Business?
The question now arises—was the Thrasio model just a bubble? Or does it still offer long-term value?
Critics argue that the business ignored structural realities. Scaling Amazon brands requires more than capital. It needs product innovation, brand loyalty, and direct consumer engagement. The model commoditized brand-building and treated it as a spreadsheet exercise.
However, supporters of the model highlight that the core idea remains solid. Fragmentation among sellers still exists. Many profitable businesses still lack scale, analytics, or strategic guidance. The key lies in smarter selection, deeper brand development, and multi-channel expansion.
Companies that adapted—by building D2C websites, diversifying into offline retail, and creating original products—survived better. They focused on brand equity, not just balance sheets.
The Indian Context
In India, the model had both promise and pitfalls.
Startups like Mensa Brands and GlobalBees scaled fast. They acquired fashion, personal care, and home improvement brands that resonated with India’s rising digital consumer base. Unlike their Western peers, these firms focused more on D2C strategies alongside marketplaces like Amazon and Flipkart.
Indian aggregators also leaned on founder relationships, regional branding, and price-sensitive product optimization. This localization helped them navigate some early obstacles better than their global counterparts.
However, Indian aggregators now face their own reckoning. Growth slowed in 2023–24. Many D2C brands saw drops in sales post-acquisition due to supply chain issues, influencer fatigue, or shifting consumer habits. As funding tightened, profitability pressures rose. Some firms began pruning their portfolios or cutting non-core brands.
What Lies Ahead?
The future of the Thrasio model will depend on how companies evolve from acquisition machines into brand builders. The following shifts must occur:
- Platform Diversification: Firms must reduce Amazon dependence by expanding to other platforms—Flipkart, Nykaa, Meesho, or their own D2C websites.
- Brand Differentiation: Aggregators must create emotional engagement and loyalty through storytelling, innovation, and design—not just SEO and ads.
- Tech-Driven Operations: Smart inventory planning, AI-based demand forecasting, and automated customer support will improve efficiency.
- Vertical Focus: Generic aggregation won’t work. Firms that specialize—like in beauty, wellness, or electronics—will manage operations more effectively.
- Exit Discipline: Investors will demand clear exit paths—whether through IPOs, strategic sales, or internal consolidation. This pressure will force tighter execution.
Conclusion
The Thrasio model captured the imagination of the startup and investment world. It promised a scalable, profitable way to capitalize on e-commerce’s long tail. For a brief moment, it delivered. However, unchecked expansion, overreliance on platforms, and rising costs exposed its fragility.
The model itself didn’t fail—the execution did. Those who treat brand-building as more than a spreadsheet game still hold potential. Whether boom, bust, or bubble, the Thrasio story offers valuable lessons on scale, sustainability, and the limits of capital-fueled growth.