When Jeff Bezos started Amazon.com – the first company to include that suffix – he complained that people simply couldn't envisage the kind of growth that online retailers were capable of achieving. The internet, he said, was the kind of phenomenon that would be "invisible today and ubiquitous tomorrow."

Ten years on and the potential of shopping on the web is plainly visible. Moreover, to overcome the "Bezos barrier" and make e-tail's growth understandable, analysts have employed concrete comparisons. For example, IMRG, the e-tail industry body, estimates that in the run-up to Christmas 2004, Britons' online spending matched the sales of 19 Bluewaters - the megacentre in Kent that is largest shopping complex in Europe. Verdict, the research company, estimates that nearly 12 million people - or one-quarter of adult Britons - shopped online in 2004.

In terms of cold hard cash, it is estimated that British consumers spent £2.6 billion online in the last three months of 2004 - a 44.5 per cent increase on 2003. Meanwhile, old-economy outfits have wobbled. Yesterday, Woolworths became the first to reveal disappointing Christmas sales figures. Today, Next, so often the darling of the sector, said its January sales had started slowly.

The inference has been made that e-tailers are taking market share from their bricks and mortar rivals. Convenience and keen prices, the e-tailer's two outstanding assets along with its low overheads, have "prompted a migration of shoppers from the high street to online retailers which we believe is an important factor for the disappointing high street trading this Christmas," Verdict argues.

Some other experts have accepted the idea, albeit guardedly. Steve Davies, a retail analyst at Numis Securities, the stockbroker, says: "Online sales growth has been much faster than overall sales growth and on that basis online sales must have taken some market share."

But while experts agree that online sales have powered forward, many are weary that they still account for a small portion of the overall market.

"Online retailers are showing significant growth, but it is important to recognise that they are working from a very low base," says Rhys Williams, of Seymour Pierce. "Four years ago, online consumers accounted for less than 1 per cent of total sales. That figure has now increased to 2.4 per cent.

"On that basis, I would hesitate to argue that online retailers are taking market share from conventional retailers. Also, remember that most of the companies that people are buying from online also have their own stores on the high street. There are very few pure e-tailers out there."

Conventional retailers with successful online operations are also reluctant to credit the notion that they are robbing Peter to pay Paul. Despite racking up online sales growth of more than 100 per cent in 2004, John Lewis, the department store partnership, does not believe that online retailers are necessarily competing with their high street equivalents.

Tesco, Britain's leading retailer, argues: "it is a case of different customers wanting to shop in different ways. Some choose to buy bulky items on-line while preferring to select fresh produce themselves from their local store. Other customers shop entirely online because it suits their lifestyle.

"Our experience has shown that different styles of shopping are often used in combination and meet the needs of a wide range of customers."

Alison Lancaster, the head of marketing and catalogues at John Lewis Direct, highlights that company's decision to venture on to the web was dictated by the need to "capitalise on the trend towards online retail".

"Consumers expect to be able to shop 24/7 and we have to model ourselves around our customers preferences," she says.

Catering for disperate customer preferences via the web looks like paying dividends. Hitwise, the online research consultants, says that the online arms of several conventional retailers are booming. Ten of the top 20 retail websites in the UK belong to bricks and mortar companies and the top three websites belong to high street stores.

These - Argos, Tesco and Comet - each increased their market share within the retail sector by at least 40 per cent in the final quarter of the year.

The benefits of setting out a cyberstall are clear. For large retailers frustrated by blocks on further acquisitions or opening new superstores, online offers an opportunity for growth. For a company such as Asda, which is owned by America's Wal-Mart, the world's biggest grocer, and which was blocked in its attempt to acquire rival Morison last year, online sales are one of the few ways in which it can increase its market share.

While the question of whether online outfits are cutting into conventional outlets' market share appears marginal, there is little doubt that e-tail has drastically shifted consumers' expectations. In a manner similar to Amazon's revolution in the book and music markets, Expedia has altered the manner in which consumers worldwide book their travel requirements. Sales of services - insurance or utilities, such as gas or electricity - are increasingly shifting online as consumers use price comparison sites to find the best deals.

"Prices, because they are so easy to check and compare online, have become far more important," Nick Gladding, senior analyst at Verdict, says. The internet has propagated a "low price culture" which has influenced the structure of the market.

"The expectation of low prices in particular has placed pressure on smaller outlets and operations. Smaller retailers find it hard to compete because scale and volume are essential if a retailer is going to beat competitors on price and still turn a profit," he adds.

The evolution of e-tail looks likely to be a story shaped by competitive pressures - a kind of survival of the fattest. And while the "Bezos barrier" may have threatened to stump investors confronted with dubious new economy business plans, it seems British consumers still recognise a bargain when they see one.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive