It is not surprising that the Internet has become the most powerful retailing channel with its ability to reach millions of potential customers at a fairly low cost. Nearly half of the world today has access to internet. The following table shows the number of users and the percentage population of Top 10 internet friendly countries.

2008-2009 saw the world economy go through a tough time, every sector lost money, profits fell drastically, the in-store sales plummeted, however the e-commerce industry saw continued growth. It was because the online retail platforms serve as a cheaper, convenient and trustworthy medium.

US online retail, ranking first with more than 75% penetration, continues to be a budding market. Barely 10 years old, it is still growing at an impressive rate. Over the years it has evolved not as a substitute to the brick and mortar store but as a complementary body. The growing online retail sales are attracting more and more retailers to e-commerce especially in this time of recession.
U.S. Commerce Department statistics are evident that online retailers took a significantly larger slice of the total retail pie in 2009. In the fourth quarter of 2009, the web accounted for 6.9% of sales, a 13% increase from 6.1% in the same period a year earlier. The total e-commerce sales for 2009 were $134.9 billion, a 2% increase from 2008. The Online Retail performed far better than brick-and-mortar stores that saw the total retail sales fall 7.0% in 2009, as per the Commerce Department.
The vast majority of Web retailers were not only profitable in 2008, a recession year; their overall level of profitability grew, reported by Forrester Research, an independent research company that provides advice in business and technology. Web divisions grew by 18% in 2008.
E-commerce accounted for 7.7% of total retail spending in US in the fourth-quarter in 2009, according to Internet Retailer. Their study shows that from 2006 to 2007 e-commerce sales grew 17% to $200 billion and sales grew again in 2008 by 7%.
The following graph gives a birds-eye view of the growth in E-Commerce Dollar Sales in Billions from 2002 to 2009 for the travel and non-travel industry.

The consistent upward movement during the initial years though may have slowed a bit due to recession lately but the growth has never halted.

Source- Internet Retailer (http://www.internetretailer.com/top500/list.asp)

US Online Jewelry Retail Industry 

The US Online Jewelry Retail Category has evolved as a consistently growing category over the last few years. The consumers are constantly welcoming the concept of buying jewelry online. The online jewelry retail saw a growth of 4% this year opposed to the considerable fall in the retail jewelry sales.  This growth is primarily because of a steady stream of new online shoppers and maturing online sales model. Jewelry has been one of the most flourishing categories even during the tough recession times as per the comScore’s report.

We have considered the two crucial web models to understand the growth of the jewelry e-retail industry.

Model I- Amazon

Amazon is the largest retail web portals of the world retailing almost every category from electronics, books, jewelry, clothes etc. The store has consistently grown by leaps and bounds over the years, however we will currently only concentrate on its jewelry divison. 

Amazon
Amazon Market Place Third Party Sales this year reached 30% of total Amazon item sales including jewelry. That's easily several hundred million dollar of sales for the vendors on Amazon.

Model II –Blue Nile

Bluenile.com, apart from Amazon, is one exemplary Jewelry Web-portal that has constantly excelled over the years. Blue Nile is a leading online luxury jewelry retail brand with the market cap of about $860 million. A public limited company BlueNile.com, unlike Amazon specializes only in loose diamonds, gemstones and high-end jewelry. The company made total revenue of $ 302.13 Million in 2009 which is almost the two and a half times the revenue when it started in 2004. Blue Nile’s growth had retarded in 2008 recession but the web-portal is back with a bang with a rapid recovery and growth of 2.3%. Experts credit this growth to the shut down and poor performances of the retail outlets.  The following graph shows the revenue growth in the past 6 years.

MySolitaire.com

MySolitaire.com is also an established web-portal retailing loose diamonds, engagement rings and fine jewelry. It is a private company merchandising in middle to high-end jewelry. The company witnessed 300% growth in the first three years of its establishment since 2004. Its number of orders grew more than three times in just five years. The lower pricing, wide variety and the exceptional choice of products are the key factors to help the MySolitaire sail through the recession. Especially in the 4th Quarter in 2009 the number of orders has seen steep rise because of its efficient marketing strategies.  In 2008 when the US jewelry retail including giants like BlueNile were decelerating, MySolitaire was making money and growing consistently. The following graph shows MySolitaire.com’s revenue trend over the last five years.

Primary reasons for Growth

• Constant and upward increase in the number of new online shoppers- it has been reported that approximately 2 million new US households will shop online, creating a total of 55 million US online shopping households in 2010.
• Increasing access to retailers that consumers know and trust-

Comparison Shopping – Customers are able to compare a large number of products to each other in matter of a few minutes or hours whereas browsing through different physical stores may take days.

Future Growth
Forrester, an independent research company that provides advice in business and technology, predicts that US online retail sales will grow at a steady in the next five years, from $155 billion in 2009 to $250 billion in 2014. In 2009 itself the online retail sales were up 11 percent, compared to 2.5 percent for all retail sales in US.

Interestingly the impact of web is equally strong outside the internet.  While $155 billion worth of consumer goods were bought online last year, a far larger portion of offline sales were influenced by online research. Forrester estimates that $917 billion worth of retail sales last year were “Web-influenced”, that means there are a large number of consumers, who select the product on web and then buy it from the retail outlet of the same store. Thus the online store not only fetches you new customers on web but also to your store. 

Online retail sales, which we define as B2C sales of goods including auctions and travel, will grow from $172 billion in 2005 to $329 billion in 2010. Both consumers and sellers continue to stoke the eCommerce fires. As consumers increase shopping-related activities and sellers compete to innovate and keep them engaged, online sales will enjoy a solid 14% compound annual growth rate (CAGR) over the next five years.