5 days before Christmas and I’ve got a 99 problems, and accessibility to product is pretty much all of them.
Let’s review.
I discuss what happens during an Obama second term/Christmas ITT
I discuss what happened to the wholesale channel three days after the election ITT.
Here’s the play by play.
Post-election, demand was high. But it was not, and I repeat not, a 2008. I had some high-net-worth individuals shake their heads at paying any type of premium for a black rifle. I had some who gladly paid my price. Product became hard to come by and a demand premium went into effect. Laypeople got PISSED that dealers raised prices overnight because, OH HEY THAT’S PRICE GOUGING YOU ARE NO WORSE THAN THE GUY WHO SELLS BREAD FOR $9 AFTER KATRINA.
No, asshole, I’m raising prices on a luxury good because demand is up, supply is down and I got the supply and you don’t. If you don’t like it, you should have done all your AR buying in JULY.
6920s were consistently $12-1,300 without blinking in this environment. I use the 6920 as it is a known value in the gun world and a highly commoditized item we all can understand. Some people bought, some people did not.
After the election, things cooled down. Some guns started trickling back into stock and availability was still limited but if you wanted to put AR-15 parts and style guns on the shelf, you could. You just were not given any choice on selection.
Things went back to “normal” a few weeks after Election Day. You could not get ammo or any hard-to-find stuff but if you wanted mags or other small things like Glock 17s? No problem. Wholesalers had plenty.
Friday, December 14
Business as usual at FC HQ. ATF did an audit earlier this month, so as they were combing through books I was shut down. During this time, I took the time to talk to vendors and I ordered every Colt 6920 I could get my hands on as some product was being made available. Vendors were letting two to four guns out the door every day to each account just to keep larger accounts from taking all the supply and nobody else gets to play. Which, I can understand and I can respect that. It levels the playing field. I see a news blurb about the shooting.
The phone starts ringing. I start knocking down 6920s at $1,050 — which is higher than pre-election but lower than today’s prices — and I sell a few.
I don’t think anything of it, it’s just a speedbump.
Saturday, December 15
I bring four rifles to a gun show, which is four rifles more than I normally bring. I see no panic buying whatsoever. One person actually needles me and asks me to sell him a gun at a price that involves me paying him $20 to take it off my table. He says he just wants the best deal possible and goes away to buy it at another dealer.
Sunday, December 16
I see emails about Feinstein flapping her gums and I get an email from one of my sales reps. Saturday night, dealers ordered every single Daniel Defense, Colt, Bushmaster, S&W rifle in their warehouse. Every black rifle they had in stock — GONE. Overnight. Every single PMAG in the building? Gone. Overnight. He wants to know if I know anything. I say no and I wander around at the show. No panic buying, no changes in prices. All my stuff is priced reasonably and I’m wondering what will happen. I leave prices the same. Show closes, I see one or two black rifle sales but nothing worth noting. Seems like business as usual.
Monday, December 17
This is when the wheels came off the wagon. For 12 hours straight my phone rang off the hook.
My entire day consisted of the following:
“Hi, I see you are a dealer for…”
“Yes I am and no I don’t have what you are looking for.”
“You don’t even know what I want yet, how can you know?”
“Stripped lower or complete rifle?”
“…yes.”
“Don’t have any.”
Twelve hours of that. Oh, and combined with emails. Everyone is wanting RRA rifles right now. In fact, someone just called me for an RRA rifle as I typed that out.
A high-net-worth individual called, freaking out. I tried to talk him out of a panic buy. Sold two 6920s to him at $1,300 each. He didn’t even blink. I start wondering what the hell is going on. Started calling vendors.
One vendor’s dealer portal is shut down for maintenance. Could be a DDOS attack or could be so many dealers are ordering product the system went down.
Other vendors I can’t even get on the phone. I’m confused.
Tuesday, December 18
Phone rings off the hook all morning. I cannot get any paperwork done. I don’t take any incoming calls after lunch because I have to concentrate on higher-priority things. Talking with vendors, a lot of items are now allocated. Glock 19s are even tough to come by. There isn’t a PMAG in the country that can be bought wholesale. Discounting has been eliminated. One of my reps talks about the potential for even further tightening of inventory, as in all accounts at X wholesaler will be getting no more than a certain integer of product.
This scares me.
If accessibility to product is further restricted, not just on black rifles, anything firearm-related is going to go up in price. For every profit center I lose, I have to make up elsewhere.
Wednesday, December 19
More of the same. I write $13,000 in sales over the phone. All day long people are chasing product that I couldn’t get a month ago.
In conclusion:
The panic buying started on Monday. There was no signs leading up to it.
Attitudes are shifting. More dealers are being accused of price gouging. I’ll share the instances of two people that I pissed off bigtime this week.
ANGRY MAN #1
I had about 20 mags come in about a week before the shooting so that day I earmarked 10 of them to be sold cheap since I got them at promo price from my vendor (whoo hoo, $1 over cost) and made ads for them. Nobody bought. Monday, I sold all the units set aside for that price (10) and I had people bitching at me. Actual conversation with someone who emailed me after I sold all of them at my super low price.
“Since I placed this order with you before the demand incident I would expect you to honor your price quote to me of $8 per mag shipping included. At this price you are still making a good profit. Had you placed an order with me I would have honored my quote no matter what happened. Please advise if we can work things out. Thanks, Bob”
Note: I’m actually not making a good profit but I told him I sold them all.
“I had a delivery of 20 of them come in, I set aside half of them at the promo price and I sold them all. If I could restock the product, I would gladly honor the price.”
“Sir, what does your Email mean? Are you unable to order more? As I said I did place the order while you were advertising the price. Being so said what price will you honor to me now? Would you sell me two at your old advertised price if not the 4 that I wanted. Please advise. Thanks, Bob”
“You may have emailed me an order and before I got it, I already sold all the promo mags at that price. I will not honor my old price. Sorry. “
Well FC I will find someone who would honor their prices. You are a deadbeat and I will post that on gunboards.
Editors note: I love internet tough guys. They are hysterical.
I try to respond professionally.
“I am not a deadbeat. Product is very hard to find and I sold all the product I earmarked for the promo. Just because the ad was up with that price did in no way indicate I still had stock available. “
If you were an honorable man you would have accepted my order. But because of the”shooting” decided you could make more money by raising prices due to the unexpected demand. Shame on you for taking advantage of a sad situation ! As said I will post this on all boards. You have NO HONOR! YOU ARE NO BETTER THAN THE KATRINA VICTIMS THAT WERE OVERCHARGED BECAUSE OF DEMAND! I will post your name on all the Boards that I use. You are a DEADBEAT seller! Just by posting this I found a seller who would Honor YOUR Price. I will post his name for honoring YOUR price. Lets see what you get out of this! Sincerely, Bob
ANGRY MAN #2
He wanted a single-stack hard-to-find pistol that is in very short supply nationally. I have two on my shelves. My price reflects demand. I make him a quote on Sunday AM and he asked me to make some changes. Get him a different extended mag, give me a discount, etc. This goes on for three days. By Wednesday afternoon everything has gone crazy. He asked me if he could come over and pick it up at the quoted price.
I explained to him that demand has shifted and my accessibility to product has changed. I would not honor the quote. Basically what it came down to was who would pay sales tax. First quote I said I’d eat it. After the events of this week I said I’m not eating $36 to make a sale, if you want it you’re going to pay the tax.
“You quoted me those prices only two days ago and never did you specify that they were valid for that day only. I was taught by my parents that if i give someone my word that it is as good as any written contract but perhaps it is my fault for expecting that from others in today’s society. All I can say is that I’m extremely disappointed and you will certainly never be considered as a source for future firearm purchases by any member of my family. I hope you have a Merry Christmas”
Oh well.
This is what’s happening. I can look online, work up a quote and by the time the guy comes in to do the 4473 – the price isn’t valid or the market has shifted. As I write this, PMAGS are still selling at $50 each, Colt 6920s have sold for as high as $2,000, SCAR 17s have sold for as high as $5,000.
These prices are on gun broker. A lot of new registered users. The conspiracy theory in me is wondering if dealers are using shill accounts to give the illusion of higher selling prices. If I were a dishonest gun dealer (I think most of you know by now I am honest to a fault, if anything) that’s something I would do.
WHAT DOES THIS MEAN FOR ME, FC? I AM ASKING ONLY WORKMAN’S WAGES I COME LOOKING FOR A JOB BUT I GET NO OFFERS?!?!?!?!?
Simply put, it means prices are going up. Distributors are eliminating discounting and price breaks because they don’t have to offer it anymore.
Some vendors are extending allocated items. One vendor I deal with allocated items BY BRAND. Anything Glock? Allocated. Any ammo? Allocated. Anything from Magpul? Allocated. They are revising this on a day-by-day basis, and as of last night a bunch of things came OFF allocation but still, restricting accessibility to product is going to be a big problem.
If I cannot get any Glock 19s, or anything else, prices are going to 2008 levels, or higher.
A lot of people are going to call an $800 Glock 19 price gouging. BECAUSE GUN DEALERS ARE EVIL. Okay, yes we’re evil and they have a point, but there’s a reason. When there is no product to sell, there’s no profit to be made.
A small firearm enterprise with two people working + owner can easily have an overhead of several thousand dollars a month in overhead. If they can’t get product to sell, the landlord and the electric company are not going to care and that product they have to sell on their shelves are going to have to tide them over until they get more.
Sure, they might make $3,500 selling 100 PMAGs at $50 each — but that’s not sustainable. That $3,500 has to last them until they get another delivery. Could be a week, could be a year. Nobody can tell at this point.
WHAT ARE MANUFACTURERS DOING TO FIX THIS?
Not sure. I talked to a few vendors today and they’re doing their best to keep product rolling but they are in a position to dictate who gets what to sell.
I am dealer direct with one name brand manufacturer and they have instituted the following sales policy.
Order a rifle, order a pistol. They will not take any order any other way. If you don’t buy a pistol, they will not sell you a rifle. They are capping magazine sales at two per order. So if you order a pistol, you are only able to get TWO magazines. If they run out of magazines they will ship guns without magazines and you can’t do anything about it.
Personal thoughts:
This is BAD for the industry. Price shocks are bad for ANY commoditized industry. That small gun dealer that just opened up? He’s in for some problems. If he started out a month ago and can’t get product, he’s not going to make any money and close the doors.
I’ve got a handful of black rifles on the shelf, and I might sell them and double and triple my money. Great! More power to you! Go capitalism! Right? Wrong. Even if I double my money and I don’t get any more in for a year, how do you expect to make a living? This is bad.
High-net-worth individuals and well-financed speculators are running the table. That S&W Optics Ready Carbine that I had priced at $875 that nobody wanted to buy? Sold for $1,200 on Tuesday. The guys who get screwed are the guys who don’t have money, business as usual.
There is NO INCENTIVE to discount anything right now. People are buying what they can get, not what they want. Don’t expect dealers to cut you a break.
I think that vendors are going to tighten their credit. They don’t need to finance people to make sales. Their finance department might say: Why should we wait 90 days to get paid when the dealer is going to flip that and make $2,300 a gun tomorrow? We should get paid now!
Stripped lowers have an asking price of $400-500 from certain dealers. I expect this to be the new normal.
Any questions?
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