NEW DELHI, INDIA: Swiggy, a food delivery platform, is one of the potential takeover candidates for Germany’s Metro AG India business. At the moment, Reliance Retail, Mukesh Ambani’s organised retail arm, and Thailand’s behemoth Charoen Pokphand(CP) group are the frontrunners to purchase a share in Gurugram-based Metro Cash & Carry.
“Swiggy has expressed interest in the purchase, and a prospective agreement would allow Metro Cash & Carry’s wholesale outlets to fuel Swiggy’s Instamart delivery concept,” a source close to the situation told ET. Instamart, Swiggy’s quick grocery delivery business, was administered by Swiggy. “The goal is to construct a hub-and-spoke model in which Metro stores supply Instamart locations, which might be delivery-only or even walk-in stores.”
Swiggy, which is financed by Japan’s Softbank Group, is considering ways to extend its e-commerce business with the introduction of Minis, and if the firm wins the bid, it would enhance its position in the online retail industry, competing against behemoths like Walmart-owned Flipkart, Amazon, and D-mart.
Furthermore, according to the financial daily, Metro’s retail locations and solid ties with FMCG giants would offer Swiggy with the much-needed muscular power to take on competitors.
“Despite problems such as poor profits and high delivery costs, consolidation is the quickest way to acquire scale in the rapid commerce market, and Swiggy is interested in the prospective merger,” another official with knowledge of the situation told the newspaper.
It’s worth noting that Swiggy will likely face stiff competition in the retail area from Dunzo and BigBasket, both of which are backed by major corporations. Reliance Retail purchased a 25.8% interest in rapid commerce startup Dunzo for $200 million (about Rs 1,488 crore) earlier this year as it tries to extend its position in the online grocery delivery market. Tata Group bought a majority share in BigBasket, a newcomer to the rapid commerce industry, last year.
Blinkit, formerly Grofers, received a $100 million investment from Zomato earlier this year.
Metro Cash & Carry operates 31 outlets and has approached more than ten corporations about buying its India operations for $1. 5 billion to $1. 7 billion.