According to reports, food and grocery delivery platform Swiggy has arisen as one of the possible contenders for the India operations of German wholesale retailer Metro AG.

Thailand’s CP Group and Reliance Retail are the other two likely candidates for a possible acquisition of Metro Cash & Carry at the moment.

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. 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.

Reports suggest that Metro’s network of stores and deep links with FMCG players will give Swiggy significant sourcing muscle and an edge over rivals.

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. Rivals in this space such as Dunzo and BigBasket are backed by large corporates.

Reliance Retail led a $ 240 million funding round in Dunzo for a 25.8 percent stake in January. Tata Group last year picked up a majority stake in BigBasket, which recently entered the quick commerce space with BB Now.

SoftBank-backed Swiggy rose 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 annualized 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 five billion market by 2025, up from $0.3 billion presently.