Growth in the online retail market is being driven by increased consumer acceptance and trust of the online business model. Over the five years through 2013-14, the online jewellery and watch sales industry is expected to grow at an annualised 27.3 per cent.

In 2013-14, the industry is estimated to post growth of 10.8 per cent to reach $67.8 million.

Despite the glittering outlook, the industry will face a number of challenges over the next five years. Firms in the industry will continue to battle sites selling fake merchandise. Online jewellery and watch retailers will also face competition from other online retailers that also sell clothing and lifestyle products.

Like many retailers migrating online, players within the industry will have to weigh up the value of having a traditional physical storefront that complements their online sales, however, companies face potentially higher costs in terms of logistics, warehousing and supply chain management.

The online jewellery and watch sales industry has a low level of market share concentration, with the top four players estimated to account for substantially less than 40% per cent of industry revenue. This is due to low barriers to entry and high level of competition within the industry.

Industry operators are mostly made up of existing brands or authorised resellers who have either shifted online or established an online presence to complement their existing operations. Online jewellery and watch retailers face competition from department store brands that are also establishing online operations.

Establishing a new operation is relatively inexpensive and the industry faces strong buyer power. Nevertheless, well established brands tend to skew sales in the direction of larger players. Market share concentration is expected to increase over the five years through 2013-14 as the online presence of the major players, such as Prouds Jewellers and Michael Hill, grows.

For more information, visit IbisWorld’s Online Jewellery and Watch Sales report.