Play.com forced to close direct retail business

Online retailer Play.com will no longer sell directly to customers and is to continue purely as a marketplace, the company has announced.

The move, which comes into effect from March, has been forced by the ending of a law that allowed items under £15 to be sold VAT-free to the UK from the Channel Islands. Based in Jersey, Play.com had been taking advantage of the Low Value Consignment Relief (LVCR) loophole and offering famously competitive prices, but the government’s decision to end the concession in April 2012 has hit the retailer hard.

As a result, all 147 staff members in Jersey have been made redundant, as well as 67 in its Cambridge and Bristol offices. A spokesperson told the BBC that about 200 staff would be left in the restructured company which will be based in Cambridge.

“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," said a Play.com statement.

The company is now owned by Japanese Internet commerce firm Rakuten, which acquired Play.com for £25 million in September 2011.

In addition to the showing the impact of the LVCR loophole's end, today’s closure hints at the continuing decline in the sale of physical media. The growing popularity of streaming and download services from the likes of Netflix and LoveFilm has put increasing strain on retailers in the mould of Play.com.