Ontario judge approves deal to take Torstar private
TORONTO -- Torstar Corp. has been delivering newspapers across Ontario for about 128 years -- and now it will add parcels to the mix.
The owner of the Toronto Star and about 76 other Ontario papers has launched Metroland Parcel Services in a bid to help businesses in the province get packages to consumers in a fast and cost-effective way.
The Toronto-based company's service will utilize Torstar's contracted driver network to offer retailers next-day and standard two- or three-day deliveries that can be tracked.
"We've been delivering to these neighbourhoods across the province for 100+ years but just didn't stop and think why don't we actually deliver other stuff?" said Paul Rivett, Torstar's chairman and co-owner.
"This is the first of a number of announcements around building on the foundation of what was just newspapers."
Rivett got the idea for the delivery service after Golf Town's Frederick Lecoq told him how successful parcel delivery has been for newspapers in France.
Nordstar Capital LP, Rivett and business partner Jordan Bitove's company, was still in the process of cobbling together a $60-million bid to buy Torstar, when the delivery idea came about.
They mentioned it to the five families that built and grew the media conglomerate founded by Joseph Atkinson in 1892 and revisited the idea when their deal went through earlier this year.
They also learned Brunswick News Inc., owned by the industrialist Irving family, was doing deliveries for e-commerce giant Amazon.com Inc. in Atlantic Canada.
"The Irvings were nice enough to basically give us the software and we just jumped right into it," said Rivett. "It was kind of unheard of how quickly we have been able to get it going."
The delivery ventures comes as newspaper businesses have struggled. Many Canadian publishers, including Torstar, have had to turn to cost reductions and layoffs to combat declining revenues and shrinking advertising dollars.
Prior to the Nordstar takeover, Torstar experimented with a $20-million tablet edition of the Toronto Star and coffee subscriptions, but both offerings didn't work out as the company hoped.
Rivett is more optimistic about delivery.
"If you think about delivering parcels on those same routes (as we deliver papers), it takes the cost down to the point where eventually you can deliver papers and flyers for free," he said.
Torstar estimates the Ontario parcel delivery market is worth an estimated $4.5 billion a year and that almost 50 per cent of consumers will shop online this year as COVID-19 continues to ravage the province.
However, competition is steep.
Canada Post, Purolator, UPS and FedEx all dominate in the market.
In other regions, a recent rash of startups like Deeleeo in Edmonton have cropped up, while Ottawa-based Shopify Inc. has been toying with small business deliveries in the U.S.
Rivett doesn't seem afraid of his rivals. E-commerce is going "through the roof" and competitors can't handle everything, he said.
"At times, they won't show up at distribution centres and they have their increasing pricing or premium pricing, so retailers are looking for outlets just to be able to ship the goods."
Torstar's service already managed to deliver its first parcels on behalf of Toys "R" Us Canada, whose president is a friend of Rivett and Bitove, and boasts on its website about distribution partnerships in the Maritimes, Quebec, Alberta and British Columbia.
If the service is successful, Rivett said, "hopefully, we can roll it out right across the country."