Sainsbury's To Shutdown Entertainment Website

Tue, 29 May 2007

UK supermarket chain Sainsbury's is axing its entertainment website after struggling in the e-commerce market against rival operations such as Amazon and Tesco.

The retailer's decision to shut down www.sainsburysentertainyou.co.uk comes as a surprise to many industry insiders, as Sainsbury's only recently announced its determination to increase its non-food sales drive .

The site, which offered customers a range of CDs, DVDs, games and books, will close on May 31.

A Sainsbury's spokeswoman admitted the site had only attracted a small amount of customers, and made a limited contribution to its overall e-commerce sales . She added that the closure would result in the group concentrating its resources on non-food ranges in the stores.

"Without a VAT edge, or some other edge over the competition, it just got lost in the crowd," explained Nick Bubb, analyst at Pali International.

Rival supermarket group Tesco was criticised earlier this month for its shipment of CDs and DVDs on a £1,400 round trip to Switzerland and back in order to exploit a tax loophole. The retailing giant had previously based its e-commerce site in Jersey, which meant it could avoid incurring VAT .

Online retail shopping has been rapidly increasing in the UK with last year's online sales figures soaring to a new record of £10.9 billion.

Verdict, UK market analysts predicted that online sales will continue to rise, reaching around £28 billion over the next five years, thanks to a combination of growing investment by retailers in their e-commerce operations and the increased take-up of broadband .