Food and grocery delivery platform Swiggy has emerged as one of the potential contenders for German wholesale retailer Metro AG’s India operations, officials familiar with the matter said. At present, Thailand’s CP Group and Reliance Retail are the other two potential candidates for a possible acquisition of Metro Cash & Carry, he said.
“Swiggy has shown interest in the acquisition, and a potential deal would enable Metro Cash & Carry’s wholesale stores to feed on Swiggy’s Instamart delivery model,” said one of the executives. Instamart is Swiggy’s instant grocery delivery business. “The idea is to create a hub-and-spoke model where Metro stores will supply to Instamart stores, which can be delivery-only or can even store where the consumer can walk into.”
A Metro AG spokesperson told ET, “We do not comment on market speculation or rumours. Swiggy did not respond to questions.
Such a move would be aimed at furthering Swiggy’s ambition to move into eCommerce, expanding its business beyond core restaurant delivery, as well as accelerating the growth of Instamart, the people cited above.
“Metro’s store network and deep ties with FMCG players will give Swiggy significant sourcing muscle and an edge over rivals,” said one of them.
Swiggy recently suspended its subscription-based delivery service Super Daily in five cities citing losses.
Another executive aware of the growth said, “Accelerated commerce is the fastest way to accelerate the segment despite challenges like low margins and high delivery costs, and Swiggy is looking forward to a potential deal.” Rivals in this space such as Dunzo and BigBasket are backed by large corporates. Reliance Retail led a $240 million funding round in January for a 25.8% stake in Dunzo. The Tata group, which took a majority stake in BigBasket last year, recently entered the accelerated commerce space with BBNow.
Blinkit, formerly known as Grofers, raised $100 million from Zomato earlier this year.
Metro Cash & Carry operates 31 stores and, as first reported by ET on May 20, the wholesaler has opened its doors for an estimated $1.5 billion to $1.7 billion, amid intense competition in the online B2B space. Has approached more than 10 companies to acquire India operations. The India unit of Dusseldorf-based Metro AG, which set up its first store in the country in 2003, posted a turnover of Rs 6,738.3 crore in FY11.
SoftBank-backed Swiggy raised $700 million (Rs 5,225 crore) in fresh funding in January in a round led by Invesco to expand its Instamart business. The delivery aggregator estimates its annual gross merchandise value run rate to reach $1 billion over the next three quarters. Consulting firm Red Seer said in a recent report that Quick Commerce will be a $5 billion market by 2025, up from $0.3 billion currently.