Swiggy one of possible contenders for India operations of German wholesale retailer Metro AG

“Swiggy has evinced interest in the acquisition, and a potential deal will enable Metro Cash & Carry’s wholesale stores to feed Swiggy’s Instamart delivery model,” one of the executives said. Instamart is Swiggy’s quick grocery delivery business. “The idea is to create a hub-and-spoke model where Metro stores will supply to Instamart stores, which could be delivery-only or even stores where consumer can walk in.”

“We don’t comment on market speculation or rumours,” a Metro AG spokesperson told ET. Swiggy didn’t respond to queries.

Such a move would be aimed at taking forward Swiggy’s ambition of venturing further into ecommerce, expanding its business beyond mainstay restaurant delivery, as well as accelerating Instamart’s growth, said the people cited above.

“Metro’s network of stores and deep links with FMCG players will give Swiggy significant sourcing muscle and an edge over rivals,” one of them said.

Swiggy recently suspended its subscription-based delivery service Supr Daily in five cities, citing losses.

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“Consolidation is the quickest way to get scale in the quick commerce segment despite challenges such as low margins and high delivery costs, and Swiggy is keen on the potential deal,” said another executive aware of the development. Rivals in this space such as Dunzo and BigBasket are backed by large corporates. Retail led a $240 million funding round in Dunzo for a 25.8% stake in January. Tata Group last year picked up a majority stake in BigBasket, which recently entered the quick commerce space with BBNow.

Blinkit, previously known as Grofers, raised $100 million from

earlier this year.

Metro Cash & Carry operates 31 stores and, as first reported by ET on May 20, the wholesaler has approached more than 10 companies to acquire its India operations for an estimated $1.5 billion to $1.7 billion, amid intense competition in the online B2B space. The India unit of the Dusseldorf-based Metro AG, which set up its first store in the country in 2003, reported a turnover of Rs 6,738.3 crore in FY21.

SoftBank-backed Swiggy raised fresh funding of $700 million (Rs 5,225 crore) in a round led by Invesco in January to expand its Instamart business. The delivery aggregator forecast that its annualised gross merchandise value run rate would touch $1 billion in the next three quarters. Consulting firm Red Seer said in a recent report that quick commerce would be a $5 billion market by 2025, up from $0.3 billion presently.