Play.com has announced that it will close its retail business in March, according to NME.com.
The online entertainment retailer, which is one of the largest online retailers in the UK, will now operate more like a shopping centre and will no longer sell products such as CDs and DVDs to customers, the BBC reports.
The Jersey-based company blamed the end of the Low Value Consignment Relief tax loophole, which was closed by the government in April 2012, which allowed items of less than £15 to be sold to the UK VAT-free.
In a statement Play.com said: "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."
All 174 staff in its Jersey offices will be made redundant, as well as a further 67 in the retailer's Cambridge and Bristol offices.
Play.com was taken over by Japanese e-commerce operator Rakuten in September 2011. It paid £25m ($39.3m, 28.6m euros) for the company, which had 14m registered users.