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Play.com: The Rapid Rise of the Internet Retailer
Play.com, is a Jersey-based, privately owned online retailer. Its main product lines include DVDs, CDs, books, gadgets, video games, DRM-free MP3 downloads, and other electronic products, as well as clothes and accessories.
Amongst the largest e-commerce retailers, Play.com was the one recording the most rapid growth, since its establishment in1988. Starting with a focus on selling CDs and DVDs mainly to young, tech-savvy men, the company quickly evolved into one of Europe’s most successful e-commerce retailers. Since the acquisition in second half of 2011, Play.com is a part of Rakuten Group.
The UK is Europe’s leading e-retail economy, estimated to reach GBP40 billion (approximately $61.7 billion) in 2015. The market has enjoyed a period of double digit growth mainly due to entry of new shoppers into online spending. E-retail market keeps rising at a much faster pace than the overall retail market and it still accounts for only a small percentage of total retail sales, presenting possibilities for new players.
Internet business is thriving in the Channel Islands due to a legal tax loophole. Goods on Channel Islands-based sites sold for less than £15 (£18 before November 2011) can legitimately be shipped to customers in the mainland UK without incurring any sales tax. The conservative estimates of the UK Treasury revealed that it is losing about £130 million in revenues per year because of Channel Islands-based VAT avoidance websites.
Play.com was one of the first online retailers targeting the UK and a rare survivor of the dotcom boom and first to take advantage of the legal tax loophole. The business was an overnight success, taking huge market share from other traditional retailers. Today, Play.com is one the UK’s biggest e-retailers, with estimated annual sales of about £427.4 million (approximately $660 million). It has 14 million registered users, 8 million listed products and a staff of 500.
In 2011, Play.com was sold to Japanese group Rakuten for a seemingly low price of $25 million. Considering controversies around LVCR tax exempt, allowing goods to legitimately be shipped to customers in the mainland UK without incurring any sales tax, and the suspiciously low price of Play.com’s recent acquisition, boosted by the lack of transparency of Play.com profit, the company may not be as profitable as expected and in need of a change in strategy.
Find interesting, please read more here – Play.com Case Study: The Rapid Rise of the Internet Retailer