Question mark over future of online industry
Thursday 22nd September 2011, 3:00PM BST.
Play.com founders Simon Perrée and Richard Goulding, pictured with Senator Philip Ozouf (centre)
THE future of Jersey lucrative VAT-free on-line mail order industry has been thrown into doubt following the sale of Play.com to a Japanese retail giant.
Play.com – one of Britain’s largest online retailers selling CDs, DVDs, computer games and now clothes and electrical goods online – has been sold to Rakuten for £25 million.
When the JEP spoke to the buyers this morning, they said they could not rule out moving Play.com and basing it in another jurisdiction.
If that did happen, it could have dire consequences for Jersey Post, which relies on the so-called fulfilment industry to remain profitable now that email had decimated its revenue from conventional postal services.
• Full report in Thursday’s JEP
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How exactly has the sale of ONE, yes ONE e-commerce retailer thrown the whole industry into doubt?
Play.com are not the only retailer who base their fulfilment operations over here. Amazon being the largest that springs to mind, not to mention numerous others fulfilling everything from CD’s to contact lenses.
Another example of sensationalist reporting from the JEP.
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The writing, for the ‘fulfillment’ industry, has been on the wall for years, shame the Jersey Post Logistics operation did not understand logistics, only tax fiddles. Nice whilst it lasted, but Jersey will wake up with a hangover.
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Doesn’t £25 million seem cheap for “one of Britains biggest online retailers”
Who cares, so the non local minimum wage people employed in this industry will return to Poland. Maybe there will be less food wrappers dumped along Rue Des Pres and Checkers at Miladi Parade will sell less junk food but otherwise, what’s the loss.
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jersey post will be in big trouble, if play goes or mymemory
people will be downloading movies, songs etc from itunes or other websites instead of buying cd’s in hmv etc.
Hmv’s days are counted anyway.
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Of course its going out of Jersey. You dont need an IQ of 200 to work that one out.
Play sold out cheap just to get rid of it while they could – they saw the end was coming.
The Japs only wanted the brand to get into the UK, not the baggage.
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Unfortunately another company will go to the wall since the owners will have no ties or loyalty to the islands in addition to our COM rolling over to criticism from the UK and EU.
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I think its probably a forgone conclusion that play.com’s operations in the island will be wound down, especially given the above comment provided to the JEP.
Rakuten has already publicly stated that their objective is to operate virtual high streets where independent retailers operate paying them a rental amount and a % of sales made, leveraging the brands and customer bases of their acquired e-tailers.
This would seem to indicate a potential winding back/cessation of play.com’s own sales, not just a move to a different jurisdiction. Even if it does keep on selling products itself it seems likely that it will centralise operations for all of its recent european e-tailer purchases, which would again make it highly likely that local operations would cease.
Makes me wonder if the £25m is the real amount the play.com owners are getting as a result of the sale or if they want to avoid any backlash for profiting greatly whilst the island suffers as a result of the sale. The FT mentioned that the buyers would also be taking on debt within the business. Wonder if some of this debt would eventually find its way, when paid off, to the current play.com owners through holding companies?
Guess we’ll never know but if the owners stick about I hope they consider basing their next venture in the island.
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Good old Pip everything “fine” nothing to worry about just another couple of hundred jobs going good Chief Minister material!!
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Vague Article. So this effects Jersey Post as they won’t be sending all the products. Why the mention of VAT? Islanders can still purchase online products and not pay VAT… long day though, I may of misunderstood what this means.
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The States should have never yielded to the HM Treasury and let other online retailers go. It didn’t end up benefiting the UK because they simply moved to Switzerland (but they’re the good guys) and it hurt Jersey (the bad guys).
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It’s a shame that Play.com has been sold. And will be an even bigger shame if the local business premises closes and all their staff made redundant.
However, Amazon.co.uk usually have more competitive prices. And they also remove the VAT from items ordered on-line destined for Jersey.
In-fact, Amazon can normally beat Play price for price, and I personally make on-line purchases via Amazon anyway. Yes, you do have to pay for postage on most items, but in my experience, they are still cheaper than anything local, and most cases, still better than Play.com.
So, this new’s doesn’t really effect islander’s that badly when it comes to on-line ordering. And the post office will still get the benefit of having order’s to deliver. Just maybe not from Play.
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How many more things have to happen on ‘Ozoufs Watch’ before the penny drops?
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‘THE future of Jersey lucrative VAT-free on-line mail order industry has been thrown into doubt following the sale of Play.com to a Japanese retail giant’
I don’t think that the change in ownership will make much difference. The previous owners are on record as saying that the company’s operations would probably move to the UK if the VAT loophole ended.
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What benefit do they actually bring?
Low wages – at a guess minimum wage
Do they employ locals – what is it 2,000 unemployed?
A totally non-green industy, DVDs shipped around the world using huge amounts of fossil fuel.
The UK government is desperate for tax revenue so may shortly stop this ‘industry’.
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goodbyie goodbyie, wipe a tear baby dear from your eyie .
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Indigo Tramphouse
Your racist comments add no value, you should be ashamed of yourself. Why do Polish people get such a hard time? All they want is to build a better life for themselves and they work hard for it with little reward, unlike some of our fellow lazy locals who think the world owes them a living !
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no 3 IndigoTramphouse………what will change at Rues des Pres when Play are based in Oxford road
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14. They bring a great deal of benefit to the island.
The owners are Jersey born and pay Jersey taxes (a Japanese company won’t).
They single handedly keep Jersey Post afloat – if they go Jersey Post will need shoring up and if you are a taxpayer that will hit you as well as me.
And whilst I agree the vast majority of packers are Polish, the permanent operational staff are not, many have been with the company for some time and with the specialist skills they have gained they won’t find it easy to find another job on a similar wage.
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11 Jonny – However, Amazon.co.uk usually have more competitive prices. And they also remove the VAT from items ordered on-line destined for Jersey.
In-fact, Amazon can normally beat Play price for price, and I personally make on-line purchases via Amazon anyway. Yes, you do have to pay for postage on most items, but in my experience, they are still cheaper than anything local, and most cases, still better than Play.com.
Jonny don’t you tick the free postage box, I don’t pay postage on anything I buy from Amazon. Postage is only charged when you buy through a 3rd party which Amazon represents, their own products are always available postage free, often they arrive in a couple of days. So half price goods, VAT removed and free postage, I just bought a 50″ LG plasma for £415 delivered, locally it’s nearly £1000.
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#16 Local
You’re in the minority I’m afraid. I was initially sorry to hear of Play.com potentially leaving Jersey, but then I thought about how many Poles will be made redundant and I cheered up no end
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SAYONARA Jersey Post
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The benefits of the fulfilment industry may be overstated. The work is unskilled and poorly paid. Other than play, the businesses paid no tax in Jersey. They do, however, cause a real problem with our relationship with the UK.
The key issue here is population. Unless we keep a real grip on population, creating unskilled work will simply suck in unskilled labour. This isn’t about criticising Poles: no doubt they work hard.
The real issue is why there are large numbers of local people who choose benefits rather than low paid work. Jersey has pleanty of low paid work in the agricultural and retal sectors that these people refuse to do: why do we need 2,000 extra jobs that they will also refuse to do.
Low paid work = an increase in unskilled immigration. We should be pleased if it leaves and just make sure those who came to fill the jobs leave with the businss.
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Congratulations to Simon & Richard for creating such an amazing venture in Play.com and actually succeeding. Too many negative comments on here and not enough support for a purely local company doing really bloody good!
Time for people to show some appreciation for what Play.com has done for Jersey in the e-commerce space. Top notch guys.
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20. Beaumont
16. local isn’t in the minority I suspect he is the silent majority.
Chatting to my friends and family the consensus is that those that moan the loudest are the laziest, skiving, takers in the island. Many people don’t have the time to post on here as they are busy holding down a job and paying taxes, so the moaners will always skew the comments.
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Donald pond #22
True but if the impact on Jersey Post is not overstated we have a lot of locals who have families and mortages who spend their money in the Island.
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joker (25) the impact on Jersey Post is not overstated
True joker, but the fundamental post business of Jersey Post would have gone anyway. In that respect the post business of Jersey Post would have contracted anyway.
The Jersey Post Logistics operation aka ‘fulfilment’ was a totally separate issue/business with little to do with the core post business. Jersey Post needs to ‘stick to the knitting’ and focus on its core postal business.
There are too many overpaid managers (mismanages) at Jersey Post and they will certainly go when Mr Keen wields his axe.
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@ Ama gona shop there.
‘Jonny don’t you tick the free postage box, I don’t pay postage on anything I buy from Amazon. Postage is only charged when you buy through a 3rd party which Amazon represents, their own products are always available postage free, often they arrive in a couple of days. So half price goods, VAT removed and free postage, I just bought a 50″ LG plasma for £415 delivered, locally it’s nearly £1000.’
I do on some item’s. But I prefer to select the first class option. I have had ‘issues’ in the past with the free delivery, so I tend to pay a little more out of choice.
I also purchased a TV from Amazon recently. With the VAT removed, and with the delivery and import GST paid, I saved probably close to the region of about £800 compared to local prices. Even compared to Play.com, the same model was £400 more expensive !
So yeah, Play being sold isn’t the end of the world by any mean’s for Jersey consumer’s wanting VAT free shopping.
I do however see the impact this may have on Jersey post, IF the new owner’s decide to move the business. It’s not just incoming. but out going mail too.
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Local (16): “Why do Polish people get such a hard time? All they want is to build a better life for themselves and they work hard for it with little reward.”
Isn’t that the point? If Jersey companies weren’t able to employ foreign workers cheaply, they’d have to pay locals a better wage. The low-paid Poles are doing local businessmen a favour but you can hardly expect local workers to thank them for keeping wages down.
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Although labour is cheaper and more plentiful now than it has been, the Japanese retail giants will still find many places cheaper than Jersey.
The Jersey Post will be a big loser.
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Every time I see a picture of Ozouf , it is bad news.
The dude is cursed. The proof is on the picture…
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The sale of companies to outside investors are costing the island massive tax revenues.
The local shareholders were taxed but the new owners won’t be as dividends distributed to overseas owners.
Another £1m+ a year lost in tax revenue. If I were Mr Ozouf I would look very closely at the forecasts for 2012/2013 for tax revenue as I believe States forecasts are overstated!
It’s unlikely this will be investigated until after the elections!! Wonder why!
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No. 31. The tax laws are being changed. Local shareholders will no longer be taxed on deemed distributions.
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How do you like globalisation now! Enjoy the pain!
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Once Play.com has to compete fairly without a tax dodge Amazon will WIPE THEM OUT
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More JERSEY job lost to greed no doubt!!!!!!!!!!
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Well said Brian (No. 28). Why is is always the poor Jersey people who are described as greedy and lazy when they’re not overjoyed at foreigners coming here to work for minimum wage? Bring some Eastern European lawyers or Third-World GPs over here to undercut the immoral fees charged by these professions. See how they like it!
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To my benefit – No, at present only one of the owners is Jersey born, Simon Perry or Perree as he likes to be known these days. Richard is UK born, he attended local school from around 13 years old.
Islander, you are missing one person, Peter who was one of the 3 founders of Play.com. He should too be congratulated by you. Although he took the money and ran years ago, clever boy.
They sell up and pocket 12.5 mill each, well you would wouldn’t you?
The writing is on the wall, of course it will affect the island, your head is in the sand if you think it won’t.
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Funnily enough Mr Moon, was recently reading an article about Eastern European GPs coming to the UK to shake up the huge fees charged.
Lets hope it extends to Jersey eh?
In fact some Consultants who don’t charge the earth would be nice here too, Bupa can’t even cover Jersey Consultant fees as they are so high compared to the UK. Anaesthetic charges too, mmmmm how much does it cost to get then here??
Wonder why?
More rip off Jersey that’s why.
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play were never that cheap anyway, Amazon all the way.
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#38 The GMC will protect the non-Eastern Europeans doctors in the UK by stating that those coming from Eastern Europe don’t have a high enough standard of training.
I had no issue with Play when I lived in the UK, but since moving to Jersey I’ve ordered twice and neither delivery got to me (I even offered to walk around the corner and collect it), and so I stopped using them a few years ago.
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38 – I have some experience of UK Specialists and their fees are similar to what is charged in Jersey.
The Jersey hospital charges BUPA ect high fees for use of their facilities. You are better having treatment in a London private hospital if you have the money/insurance than paying for the Jersey Hospital which is not up to modern standards in my experience.
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This is what Ed Milliband, leader of the Labour Party (and so, presumably, not right-wing or a racist) had to say recently: “What I think people were worried about, in relation to Polish immigration in particular, was that they were seeing their wages, their living standards driven down. Part of the job of government is if you are going to have an open economy within Europe you have got to give that protection to employees so that they don’t see workers coming in and undercutting them.”
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Its not just the staff that would loose out if Play closed down, but:-
Jersey Post- postage
Shipping Carriers- bringing the goods in
Landlords- rent for warehousing
Local office Suppliers- office equipment and Packaging
Plumbers/ Electricians-keeping the warehouses going
Local security firms – static Guards
Jersey Treasury- tax
Social Security- Contributions
Social Security- Increase in benefits if staff are made redundant
theres more to Play than meets the eye!!!
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A lot of people are missing the most pertinent point: the fulfilment industry is ONLY HERE BECAUSE OF THAT VAT LOOPHOLE. That is the very loophole that the UK government is going to reduce in November, and which will be eventually eliminated entirely (next March according to the Guardian business page). So it is the ENTIRE industry here which is likely to be packing up, not just one company. Why would they stay here after the loophole is closed? It is notoriously expensive to get goods over to Jersey, so the very idea of those companies remaining here and paying that extra cost to ship stuff in, and then back out again is wishful thinking. Without the loophole it doesn’t stack up. As others have commented, the writing is on the wall.
But our Ministers show no sign of understanding the potential consequences. Many low paid workers could be out of a job at very short notice (I am told that many are on short term contracts). The loss of the loophole could also affect genuine exporters of local produce (flowers/mail order plants). And the total loss of revenue to the Jersey Post could be catastrophic. Any plans Ministers? Or is it just the usual smiles & spin until suddenly one day we are paying £5 to post a birthday card, to arrive on the one day a week there is still a delivery?
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Tax Payer, really?
That is funny as BUPA don’t agree with what you are saying. I have plenty of experience with UK consultants. I visited the UK for an appointment and procedure 3 weeks ago and it was covered 100% by BUPA.
NONE of my Jersey appointments/procedure with local consultants are covered 100%.
So you are wrong my friend.
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