Marketplaces are all over the internet. Many tech companies run them. Amazon is a marketplace for goods, and food delivery apps like DoorDash or GrubHub are marketplaces for food. While these seem completely different, they are the exact same business. They are marketplaces with all the user data, and control delivery of goods or food.
Amazon started as an online bookstore, and today sells everything from A to Z. It sells Amazon Kindle and Alexa, and third party products like cellphone cases, desk lamps, and kitchen bowls. It is a marketplace. Amazon operates the website (where the customers interact), and deals with logistics of delivery. In the middle, you have third party companies providing goods to Amazon like the cellphone cases and desk lamps. Over the years, Amazon has collected data about what users buy, and built its recommendation engine to suggest other things customers could buy too. As it got more data, Amazon now knows what customers want before the customer figures out that they need something. Amazon has used this insight into demand for products and launched its own line of products in some categories. This is their Amazon Basics brand. Amazon controls the marketplace, the user data, and delivery. It does not need the third party for goods when it can make the goods itself. At least for high demand items that it knows will fly off the virtual shelves. This has created some concerns as third parties spend their money making different products, and when a product becomes successful, an Amazon Basics clone is available instantly. It also appears as the top result on Amazon! This has caused some anti-trust concerns.
Food ordering apps like DoorDash or GrubHub are the exact same thing. They are marketplaces where restaurants sell delivery food. Customers interact with these apps directly. The apps own the customer data. The apps control the logistics of delivery. Restaurants are the third party in the middle providing the food. Food apps are also collecting a lot of data and can recommend you food. And now they are able to predict demand for different types of food in different neighborhoods. If they could just make the food themselves, the third party restaurants will become redundant. That brings us to Ghost Kitchens. What are they? They are “virtual” kitchens a.k.a. kitchens that are not tied to a restaurant. They exist to make food for the delivery apps. The apps can rent these out and produce meals and hand them off to the delivery drivers. So as DoorDash and GrubHub get data about what food is in demand in a neighborhood, it can spin up a Ghost Kitchen and display the result in the app for people looking for that type of food. Customers order in their app, the Ghost Kichen makes the food (can be anything from pizza, to Mexican to Indian food), and their drivers deliver it to the customer. Restaurants removed from the equation.
This highlights the power of running marketplaces and owning the data. Marketplaces are not just about facilitating buying and selling. They are about being the point of contact for the customer, and owning the customer experience. Once you control the experience and manage the customer, it opens up avenues for lucrative business models. Most consumers saw marketplaces from a shallow perspective as a portal to ordering items, but they are much deeper. They eventually become the makers of the product, at least the profitable ones in high demand. This is what gives them their lofty valuations.