Woolworths went into administration last month
Administrators at Entertainment UK, Woolworths' distribution arm, have made 700 staff redundant after failing to find a buyer for the business.
The job cuts will affect staff at the "company's head office and distribution centres in Middlesex", administrators Deloitte said in a statement.
They said moves to sell the business as a going concern were being scaled down.
Woolworths, along with Entertainment UK (EUK) and other subsidiaries, went into administration on 27 November.
Entertainment UK will continue its wholesale distribution operations with a reduced workforce of 375 employees.
The company delivered up to 30% of music CDs in the UK, as well as film and TV DVDs.
When it stopped deliveries to stores, record labels and shops were forced to take action to ensure new albums by Take That and Britney Spears reached their shelves.
Its customers included retailers Zavvi, Asda, Sainsbury's, Morrisons and WH Smith, as well as supplying Woolworths.
"Whilst we will continue to consider offers for the sale of the business as a going concern, we will now focus on realising value from the company's assets," said Dan Butters, joint administrator partner at Deloitte.
The administrators added that another Woolworths subsidiary, Bertrams Books, would continue to trade as usual.
Bertram Books is a a fully owned subsidiary of Entertainment UK, and 2Entertain, a joint venture between EUK and BBC Worldwide.
The administrators are also continuing talks over the sale of Woolworths' 815 stores across the UK.
It is thought that Sainsbury's, Asda, Tesco, the Co-op and discount chain Poundland are still interested in picking up some of the retailer's prime sites.
On Thursday, Deloitte said Woolworths experienced the single biggest trading day in its history after it started a closure sale.
Some of Woolworths' shops are expected to close by the end of the year.