The reasons why it was believed that no one would buy high-ticket items like diamonds or jewelry online are legion: there are security concerns, It is an emotional sell, buyers need to hold the item, sales must be conducted one-on-one by an experienced sales person and so on.
Despite all that, according to research just released by the International Diamond Exchange (IDEX), online jewelry sales now represent the equivalent of the sales of about 2,000 independent jewelry stores, based on an average of $1 million in annual sales per store.
Online jewelry sales in the US market represented $2.1 billion of total jewelry industry sales of $59.4 billion, up from $1.7 billion in 2004.
It took seven years (from 1996 to 2002) for online jewelry sales to reach the $1 billion mark. Online jewelry sales doubled In the following three years.
In 2005, online jewelry sales have a 3.5% market share, and they are projected to reach a 7.7% share in 2010.
In part, the rise is due to high online sales of expensive diamond engagement rings. Further, there is a heavy sales bias online towards certified diamonds, which, because they have certificates attached, have become somewhat of a commodity.
However, IDEX cautions that the current growth rates won't continue indefinitely, "Even if the Internet adds another $1 billion of sales over the next three years, the growth rate will halve to 50%. As the base of sales grows larger, the rate of growth will slow. Further, as the Internet channel begins to mature, new sales will come more slowly."
For more information on online sales trends, read the new eMarketer report US Retail E-Commerce