AMMUNITION COST? Who reaps the windfall profit?

ColoradoMinuteMan said:

It's clear to me the people who have managed or owned businesses vs not. Anyone who has run a business that relies upon commodities or products to stay in business knows that times like right now are actually not great for those who rely upon retail sales of ammunition to make a profit. Stores profit from turning over inventory and when you're competing for scraps of inventory it puts you in a very precarious place. Many can't even get the inventory they need to continue to profit off sales and they are having to make much larger cash investments to even capture that inventory. If someone thinks is a good time to be in the ammunition retail business they are sadly mistaken. For scalpers selling small amounts for large profits its a bit different because they don't have to pay to keep the lights on and people employed despite having empty shelves and very little inventory to turn over.

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That covers it nicely in a nutshell. You are still paying the electric, gas, phone and insurance as well as the rent. When you can't restock inventory you find yourself between the proverbial rock and hard place. I played that game during the Clinton years.

Ron

The short answer is: No One.
The Retailer is between the rock and hard place of needing to keep stock on the shelf while not being able to get what they want from distributors. They are paying more in delivery charges, too.

Distributors are having to pay more to keep inventory on hand to be able to sell any to retailers. They are paying more to get the product shipped to them, too.

Wholesalers are paying more to get first access to the ammo in demand by the distributors. And, they are having to deal with historic high prices for shipping.

Manufacturers were shut down by the couf and couldn't produce product to need. Their suppliers were hard up against that same problem. Then, they were under considerable pressure to increase production. And adding additional shifts is not cheap, neither is the raw material to feed those shifts, and the additional QC required, nor the storage requirements needed.

So, everybody paid more to sell at higher prices.

There may be some, few, of the auction and marketplace sellers who made a higher than normal profit. But, like as not, such gains were only mathematical, inflation will have eaten up those gains.

Say you bought at 30¢ in 2018, then sold at 90¢ in 2021. That looks like a 60¢ profit, except inflation is provably 80% of that. And, all of that is ignoring replacement costs, which is a real and a significant issue.
It really doesn't matter if I bought ammo at 18¢ and sold it for $1.18 if replacing it is going to cost me $1.28

This is something often seen in retail commodities trading. The retailer is accused of profiteering, or the producer (or both)--and it's always whoever or whatever has constricted the supply in a way that changed the price.

jmr40 said:

Scalpers.

Manufacturers and wholesalers are making a higher than normal profit right now. But they also know that the bubble will soon burst and when it does things are going to be lean for many years. Most of the ammo sold in the last 10-12 years isn't being shot, but hoarded. When ammo becomes readily available there is probably a 5-10 year supply sitting in folks basements.

Local gun stores are hurting. Even though they have in many cases gone up 3X or more on price they can't make money if they don't have product to sell. I don't really blame them for charging $30 for a box of 9mm that I could buy for $8 a couple of years ago. They are still making less money and have bills to pay to stay open. I'd rather see them make a larger profit on less merchandise than sell it for $10-$15 per box to scalpers who resell it for $50.

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I disagree on the higher than normal pricing. ALL commodities are through the roof - go price a sheet of plywood......................it is the scalpers/flippers who have driven prices high. Walmart still sells at pre-Covid pricing as does Academy - some with the recent 15% increase from the makers.

George P said:

I disagree on the higher than normal pricing. ALL commodities are through the roof - go price a sheet of plywood......................it is the scalpers/flippers who have driven prices high. Walmart still sells at pre-Covid pricing as does Academy - some with the recent 15% increase from the makers.

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Yeah, plywood has doubled in price in 12 months around here. Has to do with supply vs demand. Building contractors won't quote a fixed price for new construction because the price of material goes up 10% every month. You basically get a fixed quote for labor and a floating material cost that will be passed on to the customer. Basically a time and material contract with nothing but labor cost to be fixed.

If some retailers can still sell 9mm at $15 a box and everyone online is selling for $35+ it would definitely seem like someone is making extra $20 a box somewhere in the supply chain.

reddog81 said:

If some retailers can still sell 9mm at $15 a box and everyone online is selling for $35+ it would definitely seem like someone is making extra $20 a box somewhere in the supply chain.

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Not really. The large retailers like Walmart, Dicks and others are buying large scale direct from manufacturers. The smaller guys like local gun shops are buying through middle man suppliers. They are buying less quantity. So the big box guys are not paying the same price as the little guy. The manufacturers like Federal, Winchester and Remington plus more won't even talk to the little guy. The guys buying a $1,000,000 a month are getting a much lower price than the guy spending $1,000 a month through a middle man supplier. The same is true for about any commodity. This is why Sam Waldon was able to build an empire.

Ron

Reloadron said:

Not really. The large retailers like Walmart, Dicks and others are buying large scale direct from manufacturers. The smaller guys like local gun shops are buying through middle man suppliers. They are buying less quantity. So the big box guys are not paying the same price as the little guy. The manufacturers like Federal, Winchester and Remington plus more won't even talk to the little guy. The guys buying a $1,000,000 a month are getting a much lower price than the guy spending $1,000 a month through a middle man supplier. The same is true for about any commodity. This is why Sam Waldon was able to build an empire.

Ron

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So how come online stores were able to sell at $10 per box 2 years ago? Someone is making more money today than they were 2 years ago. The prices at my local big box stores have increased 50%, online prices tripled and LGS prices are all over the place. Buying in quantities doesn’t explain this at all.

^ last April there was an announced price increase and I believe we had one this year already.

The current situation has distorted what prices really are(or should be) but I believe that $15.95 for 115gr fmj is accurate to where we should be.

Let’s not forget Walmart isn’t selling Handgun ammo so I expect it’ll take longer for price stability.

reddog81 said:

So how come online stores were able to sell at $10 per box 2 years ago? Someone is making more money today than they were 2 years ago. The prices at my local big box stores have increased 50%, online prices tripled and LGS prices are all over the place. Buying in quantities doesn’t explain this at all.

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There have been several price increases (announced by Vista and others), the most recent was 15%. Retailers have to price what they sell based on replacement costs - one reason you see gas prices jump immediately when a price increase is announced.

bullpup-addict said:

I have watched the ammo manufacturer's video's explaining their raw material cost increase, slower deliveries of components, and 24hr 7day production schedule to meet demands. My question is who is profiting the most from the sale of ammo? 1. The manufacturer, 2. Distributer- Wholesaler,
3. Major retailers including Web, 4. Local gun store. Someone in the food chain is winding up with the bulk of the 300%+ increase we are seeing. I realize with millions of new gun owners needing ammo the increase in demand but I don't see the justification for such a high increase.
What am I missing?

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Presuming the manufacturers are telling the truth, the increase is on those supplying the raw materials. Currently, delivery by truck (inter state and so forth) is booked up solid and likely charging for deliveries a bit more. So that adds to the total overhead by the time the item is sold at retail level.

Manufacturers, wholesalers and retailers are getting by and large the same percentage of mark up - the profit that keeps them in business. But keep in mind, 10% (an arbitrary number and not an industry standard) of $1.00 is 10 cents. 10% of $2.00 is 20 cents. So they take in more counters, but the percentage is the same. By the way, this is Econ 101, I had to take it in Junior College.

There isn't one single group or class or person to blame other than whoever screwed up the national economy and created a phony panic. If one doesn't believe the economy is screwed up and there wasn't a phony panic, then one cannot blame any one in particular.

Online ammo sellers and scalpers are profiting big time from this insane ammunition buying panic.

reddog81 said:

So how come online stores were able to sell at $10 per box 2 years ago? Someone is making more money today than they were 2 years ago. The prices at my local big box stores have increased 50%, online prices tripled and LGS prices are all over the place. Buying in quantities doesn’t explain this at all.

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Read post #27 where I figure he covers it well. This is not two years ago. Have you seen the increasing cost of just about all commodities?

Ron

Reloadron said:

Read post #27 where I figure he covers it well. This is not two years ago. Have you seen the increasing cost of just about all commodities?

Ron

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When retailers can sell at $18 a box and the same stuff is going for $40 per box online, someone is making more money off it than they were last year. If prices were all $36 per box then your argument could potentially make sense. last January it was cheaper to buy from online vendors now their prices are the highest of all. Neither commodities prices or volume discounts explains that.

reddog81 said:

When retailers can sell at $18 a box and the same stuff is going for $40 per box online, someone is making more money off it than they were last year. If prices were all $36 per box then your argument could potentially make sense. last January it was cheaper to buy from online vendors now their prices are the highest of all. Neither commodities prices or volume discounts explains that.

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What retailer is selling what for $18 a box? Got a link? I am not seeing anything around NE Ohio like that. Now if you want to believe someone out there is making big bucks then have at it. I checked and it's not me. I'll just continue to roll my own.

Ron

Last 9mm I bought was for my sister before Xmas and it was at Scheels and it $28 for 100 rounds. Online at that time you couldn’t buy anything for under $.75 per round for new brass cases stuff. I just called Scheels and they had 9mm for under $20 a box earlier this week.

last ammo I bought for myself was from SGAmmo and was under $10 per box for new brass cases Speer. That was 2019. Now they’re charging $40+ per box.

There’s a reason people camp outside the big box stores for an hour or 2 on the days when they get ammo shipments in. Scheels, Sportmans warehouse, Bass Pro have all raised prices some but I haven’t seen anything close to a 100% markup. Online retailers are pushing a 400% markup.

Walmart had CCI 22's 50 ct for 3.84 today. I think before it was 3.49.

The guy with the Mercury has been selling ammunition at this corner for months. Now others have joined him there and about 20 miles away on another highway I crossed another individual with a pop up canopy with an “ammo” sign.

I haven’t stopped to see how bad they are trying to stick it to desperate people but it would have to be substantial profit for me to blow my weekends selling what ammunition I could lay out on the hood of a car.

jmorris said:

The guy with the Mercury has been selling ammunition at this corner for months. Now others have joined him there and about 20 miles away on another highway I crossed another individual with a pop up canopy with an “ammo” sign.

I haven’t stopped to see how bad they are trying to stick it to desperate people but it would have to be substantial profit for me to blow my weekends selling what ammunition I could lay out on the hood of a car.

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No different than the folks I see around here selling greens, watermelon and other produce from their pick-up by the side of the road (boiled peanuts too!, yum!) Retired looking to get out of the house and make a few extra bucks - and it's cheaper than renting a table at a gun show - those prices for those table are one reason why gun show prices are silly

I bought CCI mini mag HP's x100/box for 8-9$/box last week at local walmart, limit 3. Rem 30-30 170 gr corelokt 18-19$ box of 20. That's not much higher than a couple years ago, so I'm pretty sure the MFG is not raking in all that profit.

George P said:

and it's cheaper than renting a table at a gun show - those prices for those table are one reason why gun show prices are silly

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We did the shows during the early and mid 90s in addition to having the brick and mortar shop. Typically 5 tables with an end cap at $25 a table. Today the same tables are $70 a table. I always joked with my wife the first $125 we made paid the table cost. Today we would be looking at $350 in table cost.

Wonder how much ammo I have laying around here I will never use.

Ron

Reloadron said:

We did the shows during the early and mid 90s in addition to having the brick and mortar shop. Typically 5 tables with an end cap at $25 a table. Today the same tables are $70 a table. I always joked with my wife the first $125 we made paid the table cost. Today we would be looking at $350 in table cost.

Wonder how much ammo I have laying around here I will never use.

Ron

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Plus gas, hotel, food and closing your shop

George P said:

Plus gas, hotel, food and closing your shop

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Yeah, a few we used motels fortunately most of the large shows (1,000 tables plus) were pretty local and we kept the shop open on the Saturdays, wife ran shop and myself and brother in law did the shows. We used the shows to promote the shop and that worked out well.

Ron

Reno used to have a great gun show at the biggest hotel there; dealers came in from all over the West, so they had motel, food, gas etc. and it was expensive if you had several tables in prime locations

Can't just pick one on that list. Local gun shops near me are certainly gouging. Internet Sites like gunbroker are taking advantage of people big time. I have no doubt distributors are filling their pockets. And then there are the people that find ammo on the shelves, snatch it all up and sell at rediculous prices on the internet And gun forums. I would say most all between the manufacturers (including some consumers) and consumers. Some, like Dunham Sports, Walmart and others are not taking advantage when they have ammo. But that list is short. But, When all this is over and things get back to normal (AND it will) Ammo and gun sales will drop big time. Places like gunbroker and gun shops Will Hurt. Thats when I will "Remember". It will be a long time before they see another dime from me.

There were sellers on the Mid West gun trader site selling ammo at the high mark up. The site has gone away so maybe they will have to move out to the road side now..?