Play.com - End of an era
Months after a Japanese business, Rakuten, purchased the company for a whopping £25 million, it would appear that the end is quickly approaching for one of the biggest online-only brands this side of the 21st century... That brand? Play.com!
Perhaps the owners of Rakuten feel that the Mayan prophecy actually came true as the company has recently released information regarding its retail business coming to an end.
A spokesman for the company recently stated ‘Following a strategic review of our business operations we have today announced a company restructure. 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.’
So, it would seem that the recession is now affecting the biggest online retailers. However, it appears that the company are blaming a more specific reason for the “change in strategy”.
In 2011, the UK government took action against the Low Value Consignment Relief (LVCR) loophole that Play.com had exploited since its creation in 1998, allowing the company to sell consumer goods such as DVD’s and CD’s at much cheaper prices than were available from the high street.
Once Play.com shuts down its retail business, it plans on becoming solely a marketplace for other retailers. Perhaps a risky move since the marketplace is a recent addition (released in October 2012) to Play.com and with competition from both Amazon Marketplace and eBay, I wonder how successful this could be.
What are your thoughts? Are you happy that this new rule stops Play.com and other online giants from exploiting the UK tax laws? Or are you going to miss been able to purchase cheaper goods from Play.com?
Personally, this change won’t persuade me to make my purchases at more expensive prices because of tax. I will probably end up purchasing fewer DVDs than I have done in the past, or go for a cheaper option - the virtual version of the media.
Perhaps this is the way forward for Play.com… I would be interested to hear your views!