Source: Russia’s Diamonds and Gold Journal.

The latest results from the major Internet diamond jewelry retailers would appear to show the fear of buying goods on the Internet is a thing of the past, with a vast rise in consumer confidence. Until recent years, customers were uncertain as to whether they should take a chance on buying goods from websites, particularly diamonds where clients prefer to hold and touch the stone as part of the decision on whether to buy it. Nowadays, customers around the world have become used to buying on the Internet and those days when they would wait anxiously for the goods they had ordered to arrive have largely disappeared. The Internet revolution has turned Web shopping into an everyday reality.

At Internet sales giant Amazon.com, jewelry and watches sales more than doubled in the second quarter of this year on the same period of 2005. Unfortunately, Amazon did not supply dollar figures to show the scale of the sales. Meanwhile, custom-built engagement ring sales in the second quarter increased a massive 254 percent on the year, showing how much the public prefers to be able to buy a ring of its own design rather than buying a ready-made ring or paying a vastly higher sum for a designer ring. Using Amazon's proprietary "Create Your Own Ring" feature, customers can choose from more than 200 setting styles and a range of shapes and cuts. The company says the favorite cut is the round brilliant. In similar vein, sales of loose diamonds rose 30 percent to 2.6 million loose stone/setting configurations from 2.1–million pieces in the second quarter of 2005 as consumers chose the size, quality and cut of stone to fit their ring design.

Another important advantage for online jewelers is that they can display an entire range of goods, which customers can see simply by clicking, without having to actually hold the inventory. In Amazon’s case, there is a range of loose diamonds ranging in price from $235 to $120,000. The commercial power of companies such as Amazon is such that they can sign deals with suppliers which in essence means they are doing little more than marketing the products on their site. When an order is placed, the online retailer simply requests the stone from the supplier. This is not apparent to the customer, however, who believes that sites actually have the goods on hand. But it is also of little or no importance to the consumer who is simply content to have found goods that can be delivered within days with a money-back guarantee and free insurance. Compare that with the traditional bricks and mortar stores whose inventory is, for obvious reasons, more limited and whose opening hours cannot compete with the Internet’s 24/7/365. And it is not just in the United States that sales online sales are continuing to rise. Amazon reported sales grew 20 percent in the North America region in the second quarter but 24 percent internationally.

Online diamond and diamond jewelry retailer Blue Nile was also pleased with its second quarter results. While net income did not rise substantially–up to $3.1 million from $2.8 million a year earlier–net sales soared 30 percent to $56.9 million from $43.8 million last year, showing that customers are happy to shop online. On a smaller scale, online diamond retailer Abazias also reported sharply higher sales–up 49 percent to $1.1 million. Abazias.com showcases more than 80,000 diamonds valued at over $350 million on its site with most of them GIA, AGS or EGL certified.

If these results show the power of the online shopping experience, then new American research shows even more clearly the changing buying patterns of luxury consumers with net wealth in excess of $750,000 and an annual income of more than $150,000. The latest research carried out by the Luxury Institute in New York, shows that 38 percent of wealthy consumers prefer buying luxury products online, with just a third plumping for traditional shopping. The research also shows how the Internet has become the preferred method for research by customers before they buy goods, with almost 90 percent of consumers researching luxury products and services purchases online and a massive 80 percent preferring this means to any other option. Internet and email channels are also the best means for luxury firms to present offers for goods or services to the wealth, according to the research.

Data from Amazon and Blue Nile provide substantial proof that luxury shoppers have few qualms about buying big-ticket items, with recent sales of diamond jewelry costing around $100,000. Blue Nile says the most expensive piece of jewelry sold during the last Christmas sales season was priced at $170,000, while the highest-ever price for an item was $250,000 for a diamond engagement ring. The firm said it sells one or two items every day priced at about $50,000.

Online jewelry buying would appear to be tailor-made for that most important section of the jewelry-buying public–men. Locking themselves away with just the computer for company, they can spend hours researching all the different options without the need for endless hours of trudging around stores and malls and the same old conversations with shop assistants who are far from familiar with the jewelry they sell. In front of the computer, they can take advantage both of seeing and comparing diamonds, but also the free educational services most web retailers provide regarding the 4Cs and other diamond-related information.

Part of the reason for rising Internet diamond jewelry sales is the sharp rise in Broadband usage which allows retailers to post higher quality pictures of their goods thus enabling surfers to receive a better impression of the product. This, in turn, gives consumers the confidence to buy since they are able to better see what they will get for their money. Broadband is also important since it allows consumers to surf websites much more quickly than in the days of slower, dial-up Internet. With the ability to flit quickly between and within sites, potential customers are able to make better-informed and quicker decisions. Broadband, or always-on Internet, also means that consumers are not under as much pressure to reach a decision as in the days when surfers had a package of, say, 20 hours per month to surf and were conscious of the minutes ticking down.

Although a great deal continues to be written about the Internet retailing revolution, web sales represent just a small fraction of overall jewelry sales in the United States. According to industry estimates, annual Internet jewelry sales in the U.S. are the equivalent of the revenues of around 2,000 independent stores. In other words, web sales annually are approximately $2.1 billion compared with total jewelry sales of around $60 billion. That is just 3.5 percent of total sales, which shows that Internet retailers have a long way to go to even catch up with their counterparts at traditional stores. Nonetheless, Internet jewelry sales are likely to keep growing although at lower rates than have been seen in recent years. Online consumer spending increased by 20.1 percent in the first half of this year, despite sluggish growth in retail in general, according to ComScore Networks. E-commerce sales rose to $80.8 billion from $67.2 billion during the first half of last year, ComScore Networks reported. Non-travel retail increased 24.6 percent from a year ago to $46.1 billion. "Despite the sluggishness of retail growth in general, online consumer spending remains strong," said Gian Fulgoni, chairman and co-founder of ComScore. For the full year, ComScore expects online spending overall to reach $170 billion, including $102 billion in non-travel e-commerce. This year could mark the first time such spending has topped $100 billion.