Whatever the accuracy of WMT, traffic drop/loss in sales (my emphasis added) appears to be true...
Looking at the graph it displays I can see when the number of indexed urls dropped from 10 to 2 over a period of 14 days. This coincided with a massive drop in site traffic and more importantly a fall in sales.
So, in this case, whatever WMT is showing may be more relevant than the site: operator. The usual advice is to ignore WMT when there's a reporting disagreement, and to use traffic as a gauge.
Perhaps WMT is reflecting something like a "supplemental" status... telling you that even though the pages might show up in a site: search, they're effectively supplemental and not of much help.
Regarding the timing of the drop... Google's making it harder to cross-reference drops with other activity, but I still look at timing in trying to diagnose the problem. At the least, big algo updates are usually noticeable.
How long has the site been up? Maybe your previous rankings were due to a "honeymoon" period that Google grants new sites.
How did you get your backlinks, from what kinds of sites? Were they blog links that might have scrolled off of the blogs' top pages?
If the page sells only one exclusive product, was it an EMD? Lots of possibilities.
How can you characterize the site and the product, without getting into specifics, and what more can you tell us about how you built the rankings that have dropped?