Rakuten’s Play.com is closing its retail business following the end of a key UK tax break

Rakuten’s Play.com is closing its retail business following the end of a key UK tax break

Online retailer Play.com has revealed plans to shut down the core part of its business, selling DVDs, CDs and other goods, and instead focus solely on its online consumer marketplace from March 2013.

The announcement, reported by the BBC earlier today, will mean that 147 staff from the company’s Jersey offices will be made redundant. A further 67 employees from its offices in Cambridge and Bristol will also lose their jobs as part of the closure.

Play.com has reportedly blamed the decision on the removal of Low Value Consignment Relief (LVCR) that allowed products (up until Spring last year) priced £15 or below to be sold VAT free to the United Kingdom.

In a statement seen by the BBC, the company said: “Moving forward we are intending to focus exclusively on our successful marketplace, which is our main business area, and to phase out the direct retail part of our business.”

Play.com is a wholly owned subsidiary of the Rakuten Group. Founded in 1998 under the name Play247.com, it was one of the first online retailers to target consumers in the United Kingdom specifically. In 2008, the company re-branded simply as Play.com, expanding from selling just region one and two DVDs to CDs, video games and other electronic hardware. These days, it sells a whole range of goods including clothes, gadgets and outdoor equipment.

The removal of Play.com’s main retail arm will undoubtedly have a large effect on the online retail landscape in the United Kingdom. It was arguably the main rival for Amazon, with the stumbling Zavvi, created from Virgin Megastores, struggling some way behind.

As a result, Amazon.co.uk will likely gain an even greater influence and market share in the region. Time will tell whether Play.com can succeed under its new guise as a consumer-led marketplace, similar to eBay and Amazon’s own, somewhat similar offering online.

Image Credit: priceminister/Flickr

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