Play.com, a Jersey-based, privately owned online retailer, has recorded 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. Following its acquisition in the second half of 2011, Play.com is now a part of Rakuten Group.
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The UK is Europe’s leading e-retail economy, estimated to reach a value of GBP40 billion (approximately $61.7 billion) in 2015. The e-retail market is continuing to grow at a much faster pace than the overall retail market and still accounts for only a small percentage of total retail sales, presenting opportunities 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 can legitimately be shipped to customers in the mainland UK without incurring any sales tax. Play.com was one of the first online retailers to take advantage of the legal tax loophole.
In 2011, Play.com was sold to Rakuten for a seemingly low price of $25 million. Considering the controversies around LVCR tax exemption and the suspiciously low price of Play.com’s recent acquisition, boosted by the lack of transparency of company profits, Play.com may not be as profitable as expected and in need of a change in strategy.
Your key questions answered
What are the factors facilitating Play.com's rapid growth?
What are the business advantages of offshore fulfillment?
What is the size of the selected online retail markets in Europe?