Jersey-based online retailer Play.com has announced that it will be closing its direct retail business, continuing as an online marketplace only, and leaving 214 staff without jobs. 

From March, the company will act as a marketplace for other sellers to use to sell goods, and will no longer sell directly to customers, taking a cut of all sales made through the site in a similar way to eBay.

Play.com has said that the move is due to the UK government's closure of a loophole for transactions under £15 from the Channel Islands, which meant the Jersey-based site could sell CDs and DVDs without paying VAT.

The loophole, called the Low Value Consignment Relief (LVCR), was closed in 2012.

"Following strategic review of our business operation, we have announced a company restructure," said Play.com in a statement.

"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 LVCR implemented in April 2012 has been a determining factor in this decision."

A Play.com spokesperson told BBC News that the company was completely pulling out of Jersey, with the remaining 200 employees to be based in Cambridge.

The LVCR's closure is already believed to be the cause of around 400 redundancies in the Channel Islands.

Play.com's announcement also highlights the difficulty retailers are facing as digital media's popularity increases. Not only are services like Apple's iTunes putting a strain on CD and DVD sales, but the growth of streaming services such as Netflix and Spotify are making it more difficult for retailers to survive.

The news is likely to be welcomed by Amazon, however, which was seen as Play.com's biggest rival, although Play.com has taken to Twitter to insist "We're only closing our direct retail business. You can still buy from our successful Play Marketplace as usual," reminding customers that there are more than 20 million listings there.

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