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Play.com Closes Its Direct Retail Arm After Closure Of Tax Loophole Hits Sales, 147 Jobs Lost

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PLAY COM CLOSES RETAIL ARM
Play.com will no longer sell directly to customers, but will encourage them to sell their own goods through the site instead | Alamy

Jersey-based entertainment retailer Play.com is to stop selling items direct to customers.

The closure of its retail operation is being blamed on the government's clamp down on the Low Value Consignment Relief (LVCR) - which used to allow items costing less than £15 to be sold to the UK VAT free.

From March 2013, Play.com will become a marketplace-only service, allowing customers to sell goods through its site with Play taking a slice, much like eBay or Amazon's marketplace.

As of 1 April 2012, LVCR no longer applied to goods imported to the UK from the Channel Islands. The reform was intended to ensure UK companies, especially small and medium sized enterprises, can compete on a level playing field with companies operating in the Channel Islands.

In total, 147 jobs have been lost in Jersey and a further 67 across its Cambridge and Bristol offices. This is on top of the figures from the States of Jersey, who said last September that 400 people had lost their jobs elsewhere in the island because of the end of LVCR.

In a statement on the BBC, Play.com 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 was sold to Japanese company Rakuten for just £25m in September 2011, but has suffered dipping financial returns ever since.

Hiroshi Mikitani, Rakuten's chief executive sent out a bullish press release on Wednesday morning explicitly rejecting the idea that he was producing Japan's answer to Amazon, as he "cringes" at Amazon's "vending machine" philosophy, which he claims is different to his own.

Amazon, he claims, relies only on low-price and efficiency, whereas Mikitani believes in empowering sellers on the marketplace to be individual and allowing them to manage their own relationships with their customers.

This provides individual 'shopping experiences’, which are playful and stimulating, allowing for human interaction, and doesn't rush the shopper to the exit.

"We created a platform built for more than speed and efficiency. We created a forum for discovery shopping,” Mikitani said.

Are you surprised at Play.com's exit from the retail market? And can it survive against eBay and Amazon? Let us know below.

 
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