Play.com plans to cut more than 200 jobs as it closes its direct retail business to concentrate on its marketplace operation. It says the move to phase out direct sales comes as a result of last April’s ending of Low Value Consignment Relief (LVCR).
LVCR, widely seen as a VAT loophole, allowed retailers to dispatch goods costing £15 or less from the Channel Islands without paying VAT at 20%. Many online and multichannel retailers based in other parts of the UK set up operations that benefitted from the exemption. When the scheme ended last April , it was feared that hundreds of jobs could be lost as a result of changes that could make the-then flourishing Channel Island fulfillment industry uncompetitive.
Today’s news from Play.com appears to justify that fear, with the announcement that it is to consult workers on cutting 147 jobs in its Jersey finance and warehouse teams, and a further 51 permanent and 16 temporary staff in its Cambridge and Bristol offices.
The company said the restructuring announced today followed a strategic review of its business operations.
In a statement it 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. The removal of Low Value Consignment Relief (LVCR) implemented in April 2012 has been the determining factor in this decision.”
The online retailer added: “We would like to reassure our customers that they can continue to shop with us, purchase from an expanding range of products and still receive the great quality of service they have come to expect.”
Play.com is the 11th most visited retail site in the UK, according to the latest IMRG-Experian Hitwise Hot Shops List of the top 50 UK e-retailers. Its Play.com marketplace, launched in 2006, was rebranded to Rakuten Marketplace in October, 13 months after the company was bought by Japanese marketplace giant Rakuten.
No comment on the decision to cut jobs in Jersey was available tonight from the States of Jersey, who challenged the LVCR decision in the High Court last year, but in April subsequently abandoned thoughts of an appeal.
The latest issue of Internet Retailing magazine features an interview with Play.com’s Adam Stewart on the company’s plans for its Marketplace. Read it by clicking here.