Ever had a dealer refuse to accept a transfer Buds?

Phaedrus/69 said:

Speculation aside I think it's pretty obvious that the FFL feels it's worth doing the transfers for a fee. They're not charities and if they weren't making money off it they wouldn't be doing it, period. The little pawn shop I use has raked in a couple hundred bucks from me in transfers for very little work on their part and very little time. I had never set foot in there before I found them on Bud's list of preferred FFLs, so that alone was probably worth it for them.

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Actually speculation aside, I don't think its "pretty obvious". The market forces them to do the transfers. That's different from "They're not charities and if they weren't making money off it, they wouldn't do it." It's a damned if you do and damned if you don't situation.

Transfers run $35-$50 per gun in my area. TN charges a $10 fee for Nics checks beyond what the FFL might charge.

I found a pawn shop in the same way and had never set foot in there before. I have since purchased a number of things there, but their prices on firearms are simply too high.

There also appears to be some sort of "pawn shop law" which forces pawn shops to hold used guns for a week or something like that prior to transferring from an outside party. That might matter to you or make no difference. But gun shops don't appear to operate under the same constraints.

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adapt or die.
Unfortunately when/if they die you will be left with fewer choices. I certainly would never want to see the day where Walmart or other big box stores are my only choice...

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This is just not accurate. If the market wants choices, the market will grant the wish. Walmart exists because the public wants it. As far as choices go, my walmart stocks a wider variety of stuff I need than any other retailer. They have brilliant algorithms that do a very good job of tapping into the vein of regional demand.

On-line discount gun sellers likewise exist because the consumer wants it. You say that choices are decreasing, but this is simply not the case.

In this new digital world of commerce, I have an overwhelming amount of choice. With a few clicks I can find, bid, and acquire guns that have been out of production for 30 years. My LGS can choose to be a part of this, or they can struggle against the wind.

By adapting, they serve to expand the choice you claim will be stifled.

This is just not accurate. If the market wants choices, the market will grant the wish. Walmart exists because the public wants it. As far as choices go, my walmart stocks a wider variety of stuff I need than any other retailer. They have brilliant algorithms that do a very good job of tapping into the vein of regional demand.

On-line discount gun sellers likewise exist because the consumer wants it. You say that choices are decreasing, but this is simply not the case.

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Walmarts not going to transfer a gun for you, and they only carry the budget/bottom line guns. (That's my point)
When LGS's go out of business in my area they are not replaced by a bigger better one, rather non gun related businesses.

Walmarts not going to transfer a gun for you, and they only carry the budget/bottom line guns. (That's my point)
When LGS's go out of business in my area they are not replaced by a bigger better one, rather non gun related businesses.

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I understand your point, but it is not accurate IMO. I have never purchased a firearm from Walmart, and that is not the choice I was referring too. It is true that their has never been fewer LGS's. It is also true that we have NEVER seen more consumer choices than we have now. 15 years ago a lefty like me had to search LGS's for months to find a specific model, and then would pay through the nose for it. Now, I can find what I want and have it delivered to one of a dozen FFL's that will gladly transfer it. If these FFL's go out of business, others specializing in transfers will pop-up. They already have in my market.

My FFL uses transfers as his primary business. $25, several computer stations for completing paperwork, and a line out the door. Very little overhead, and likely 30-40 transfers per day. Add in the shipping fees for outbound sales, ammo, and the occasional gun sale, he is cleaning house. The market innovates to create the choices you think will go away. It is in that process now, and that process is an ugly, painful one for those clinging to the old ways.

Your point about less choice in the future goes against market forces. Consumers want choice. The market will, AND HAS, granted it.

My FFL uses transfers as his primary business.

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That's pretty cool. I'd do it too if I believed I could do 20 transfers a day on average. But I don't believe the local market would support that.

That's pretty cool. I'd do it too if I believed I could do 20 transfers a day on average. But I don't believe the local market would support that.

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If you are in a small market, with little local competition, then the market likely allows you to charge more for transfers. When it comes to service-related businesses, the degree of local competition can massively change your pricing ability. IF your local market cannot afford to lose you, they must, and will, pay what it takes to keep you providing the needed service. Assuming you can survey the market accurately to determine what that price-point is.

I do this constantly in my business, and that target moves frequently. There is no such thing as "self employed". The market is our boss, and we must listen and obey or he will fire us.

Many here in my neck of the woods won't take transfers from anyone, especially Buds. They price them over a hundred dollars so "I guess" they are within the law.

I've never had a problem with a store completing an FFL.

Gun stores are like any other store, some try to identify with a certain niche market. I have found more than a few stores that have a habit of acting demeaning to everyone that isn't there to buy something above the $1k price range.

For me, I prefer the local, mom and pop type stores that help you get what you want. When I find these places I will pay more because I have a vested interest in their success, but in general if it is much more than a 10% markup I look online and ask about a transfer. Also, these places get most of my business for accessories. Unless they have it in stock, I admit to being a little impatient and not wanting to wait.

In a nutshell, after reading through all of these posts, I am of the opinion that it isn't really an issue with doing FFL transfers it is an issue with the stores being asked to do something that isn't in the stores market niche.

Speaking for myself, I just won't grossly overpay for anything just for bragging rights or to try and belong to the rich dandy clique. Maybe it's just me, but I won't shop anywhere where I get the impression that it is demeaning for the store to business with me.

gym said:

Many here in my neck of the woods won't take transfers from anyone, especially Buds. They price them over a hundred dollars so "I guess" they are within the law.

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There is no "law" covering what an FFL can charge for a transfer.

Be glad you don't live in DC. There is only ONE FFL there that will do transfers, there will -never- be any more (city counsel will never give them a business license), and 4 years ago he charged $165 ... no idea what it is now.

The DC price is probably consistant with the regional economy. DC has been doing very well in this lousy economy for the last 5 years.

gym said:

Many here in my neck of the woods won't take transfers from anyone, especially Buds. They price them over a hundred dollars so "I guess" they are within the law.

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what neck of the woods are you in?

$20 - $30 standard here (North Mississippi/Memphis)

Look, I'm not saying dealers shouldn't do them. And I'm not suggesting how much they charge for them. But for a full service LGS with serious inventory, if they are managing their business right it's a net loser in cash flow. Because selling a firearm with accessories, filling back stock on hot selling accessories, or selling range time are all far more profitable for the time involved as a good use of payroll.

All I'm saying is thank them for it and realize they are doing you a favor. It may be good business to do them (to increase traffic), but for a well stocked full service shop it's a net loser. And remember that if your LGS goes out of business odds are you'll be left with fewer choices and maybe a 200 mile drive to save money on that "great internet deal".

In the current political climate FFL's are getting harder to get in many places. And I suspect in many states the days of the pawn shop or basement residential gun shop are about ten years from being history. And the start up costs and regulations for new retail operations are getting tough period, much less with the added "risk" of selling firearms. So pray that local guy does stuff right, because he isn't going to make it just being an expensive showroom for Buds.

But for a full service LGS with serious inventory, if they are managing their business right it's a net loser in cash flow. Because selling a firearm with accessories, filling back stock on hot selling accessories, or selling range time are all far more profitable for the time involved as a good use of payroll.

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Opportunity cost, how does it work?

One concern I've always had with 'hobby' dealers (and I was one, so I'm not throwing stones) is that they have a lot less skin in the game when it comes to dealing with the state. If a locality could (like Chicago has) essentially eliminate brick and mortar gun shops, shutting down home-based or gun-show based FFL's is a piece of cake. It carries very little political risk, since these folks are not seen as 'legitimate' by the media or other non-shooters, and they won't have the resources to fight back, like an established business would. Like Cook County showed, even a $500 annual fee for FFL's puts a lot of the hobbyists right out of the game.

It's the same risk Wal-Mart poses, in a sense; if WM put all the LGS' out of business, the tiniest bit of political pressure could make WM stop selling guns. Where are we then?

Not saying I ALWAYS buy at my LGS, but I TRY to; especially if their prices are reasonable and competitive. I'll pay $40 more to see and handle a gun they have in stock, just so they're more likely to be there next year.

Larry

perhaps you dont get the point of buying online. We may not like every aspect of it but,,,,,

If i order a gun from buds, and when i go down to pick it up i have the ability to INSPECT it. If i dont like the gun, say i find a big ol chip or scratch down the slide, barrel, cylinder, etc I simply say NO and send it back for refund or replacement.

But when i go to the local gun store, private or chain, the only guns for sale is what is in the case. If i find an issue with the revolver in the gun case thats the only gun i can buy from that store in that make and model. Even though they have 12 identical guns in back, they wont take one of those 12 out untill the one in the case sells.
Thats happened alot. its annoying when you go in and actually put 6 100 dollar billson the counter and say, "bring me 2 or 3 of these from the gun safe in back and ill be taking one home in half an hour" they refuse.

Bubbles said:

Opportunity cost, how does it work?

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I understand "opportunity cost", the problem is opportunity cost will not keep a large retailer with large overhead subject to the regulatory and cost pressures of todays businesses open. If you're selling a dozen guns a day and doing 2-4 transfers a day you're probably OK. If OTOH you're doing a dozen transfers and selling 2-4 guns a day that business model won't work, because it simply won't pay invoices on time. It takes a certain amount of income to cover costs, and $50 an hour on 2 transfers from Buds done by an employee that cost you $25 an hour w/wages and benefits is a loser plain and simple. The reality is you would make far more money sticking that investment in a stock index fund. If you can't pull down about 30-35% gross margin, you can't survive in retail.

One of the other things not covered in this discussion of margins is that larger retailers make as much or more on their money than product when it comes to firearms. In other words, they get good terms, 90-180 day terms in some cases. And the sharp ones sell their product 2-3 times during that time period. If you are buying right, you've sold a gun a couple of times before you've paid for it once. But don't kid yourself those racks of AR's cost big bucks when the invoices are due.

Bezoar said:

perhaps you dont get the point of buying online. We may not like every aspect of it but,,,,,

If i order a gun from buds, and when i go down to pick it up i have the ability to INSPECT it. If i dont like the gun, say i find a big ol chip or scratch down the slide, barrel, cylinder, etc I simply say NO and send it back for refund or replacement.

But when i go to the local gun store, private or chain, the only guns for sale is what is in the case. If i find an issue with the revolver in the gun case thats the only gun i can buy from that store in that make and model. Even though they have 12 identical guns in back, they wont take one of those 12 out untill the one in the case sells.
Thats happened alot. its annoying when you go in and actually put 6 100 dollar billson the counter and say, "bring me 2 or 3 of these from the gun safe in back and ill be taking one home in half an hour" they refuse.

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That's weird, my experience has been just the opposite. You need a new store.

The problem with your position Burk, is no one here is talking about big retailers except you. The closest big retailer to me is 2 hours away. Most of us deal with small locally owned gun shops. There are 5 in my town/county. Four have been in business for decades and none of them use your business model. The fifth store is less than two years old and is doing well with its indoor gun range, but only stocks about 100 tacticool firearms. That's his niche.

The largest shop in town carries maybe 300-400 guns in inventory, the smallest maybe 100 guns tops. The guy I deal with, about 200.

Your business model would never survive here.

Transfers are such a money-losing operation that the local tacticool shop near me has a frequent transfer program- transfer 5, get the 6th free. 25$ per transfer. It appears they find it advantageous, business-wise.

The labor cost calculations some of you are doing ignore that in retail you can do paperwork and receiving when there are no customers needing help. If you are so busy there is never time with no customers, well, I guess you don't need to worry about losing money to online sales, then, do you?

burk said:

I understand "opportunity cost", the problem is opportunity cost will not keep a large retailer with large overhead subject to the regulatory and cost pressures of todays businesses open. If you're selling a dozen guns a day and doing 2-4 transfers a day you're probably OK. If OTOH you're doing a dozen transfers and selling 2-4 guns a day that business model won't work, because it simply won't pay invoices on time. It takes a certain amount of income to cover costs, and $50 an hour on 2 transfers from Buds done by an employee that cost you $25 an hour w/wages and benefits is a loser plain and simple. The reality is you would make far more money sticking that investment in a stock index fund. If you can't pull down about 30-35% gross margin, you can't survive in retail.

One of the other things not covered in this discussion of margins is that larger retailers make as much or more on their money than product when it comes to firearms. In other words, they get good terms, 90-180 day terms in some cases. And the sharp ones sell their product 2-3 times during that time period. If you are buying right, you've sold a gun a couple of times before you've paid for it once. But don't kid yourself those racks of AR's cost big bucks when the invoices are due.

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I have a lot of problems with this statement. Maybe this is the wrong forum. But like DammitBoy said You are talking about a very narrow business model that does not apply to probably 90% of the LGS stores that I have visited in my lifetime. But even still I think you are making some incorrect assumptions in your modeling. You are acting as if it is an either or. Transfers should be looked upon as incremental business. I do not want to trade sales for transfers. I want to add transfers to my revenue without sacrificing sales. This can be done quite successfully if done right. And assuming it is I will gladly pay a 40-50% ratio to drive that business.

Also, the statement that you have to run a 30-35% gross margin to survive in retail is categorically wrong. That may be true in the models you have worked under but that, by itself, is way too broad of a statement.

Speculation aside, the market isn't "forcing" anyone to do transfers. There are five other shops that won't do them at all. The biggest LGS will do them but at the highest rate of any FFL in the state (that I can find). Scheel's will not do them at all. Pet theories aside no one seems to be forced to do them, or at least some of the shops didn't get the memo and don't!

And yes, they do make a profit off them them. Maybe not everyone but the one I use. There's a lot of upside to doing them, and the upside seems greater the smaller you are. When I buy a gun it's almost always an HK, but there are few HKs to be had here. The pawn/FFL I frequent has only ever had one HK that I've seen (that they weren't transferring for me). So I wouldn't go there otherwise.

This thread is rapidly becoming pure nonsense. The OP asked a question and got a lot of answers that have nothing to do with what he asked.

I understand "opportunity cost", the problem is opportunity cost will not keep a large retailer with large overhead subject to the regulatory and cost pressures of todays businesses open. If you're selling a dozen guns a day and doing 2-4 transfers a day you're probably OK. If OTOH you're doing a dozen transfers and selling 2-4 guns a day that business model won't work, because it simply won't pay invoices on time. It takes a certain amount of income to cover costs, and $50 an hour on 2 transfers from Buds done by an employee that cost you $25 an hour w/wages and benefits is a loser plain and simple. The reality is you would make far more money sticking that investment in a stock index fund. If you can't pull down about 30-35% gross margin, you can't survive in retail.

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This is exactly why we're not a retailer and we focus on selling services, not products.

The OP asked a question and got a lot of answers that have nothing to do with what he asked.

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I'll beg to differ. There are a lot of reasons why a dealer might refuse to do transfers from Bud's and many of them were listed in the discussion.

Agsalaska said:

I have a lot of problems with this statement. Maybe this is the wrong forum. But like DammitBoy said You are talking about a very narrow business model that does not apply to probably 90% of the LGS stores that I have visited in my lifetime. But even still I think you are making some incorrect assumptions in your modeling. You are acting as if it is an either or. Transfers should be looked upon as incremental business. I do not want to trade sales for transfers. I want to add transfers to my revenue without sacrificing sales. This can be done quite successfully if done right. And assuming it is I will gladly pay a 40-50% ratio to drive that business.

Also, the statement that you have to run a 30-35% gross margin to survive in retail is categorically wrong. That may be true in the models you have worked under but that, by itself, is way too broad of a statement.

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Perhaps, the LGS is different in MI where we have several large independent stores that have large 500-1000 gun inventories. I know of a couple of shops that a one location stores with quarter of a million dollar credit lines from Browning. And in those stores cases (maintaining that large of an overhead) the 40-50% ratio is a recipe for failure.

As far as 30-40% gross margin, their are very few retail operations in any segment that survive on less. The only exception to my knowledge is Wal Mart who come in at about 27%, but they do it with absurd volumes and sacrifice service to do it. I'm not suggesting you have to gross 30-40% on a gun to make it. Only that by the end of the day the total receipts verses the inventory turned you need that amount when you look at the real overhead of a retail business.

It can be range fees, gunsmithing work, hunting clothing, tactical gear, gun cleaning, ammo, even transfers, whatever. And remember what I said about making money on money. Many of these stores will sell a product 2-3 times before they pay for it once. That is extra money interest free in the till too. But after you take out inventory cost, taxes, payroll including HC , utilities, Legal costs, and rent 30-40% doesn't sound like a whole lot.

Back in the days when retail was exploding and high end malls were the rage, a location in a high rent mall needed to clear closer to 50% to break even.

Thats happened alot. its annoying when you go in and actually put 6 100 dollar billson the counter and say, "bring me 2 or 3 of these from the gun safe in back and ill be taking one home in half an hour" they refuse.

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HUH? Never saw that, even in a big box store, let alone a mom and pop shop. As others have said, perhaps you need to find another store

What I meant was, since there is no law against it, they can charge whatever they want to. But when you charge a hundred bucks for 5 minutes of your time, I think it's price gouging, and there should be a law against that. The same way the post office has rates, so should gun dealers, I think it would stimulate online sales, and make a better market for the buyers.
I know the guys with FFL's are going to flame away, but just like you can have a car or tires sent to a local shop for delivery so should you be able to get a gun delivered for a 25-35 dollar flat rate. It's kind of like everyone charging whatever they wanted to mail a letter, which is what we have now. If you need to have a firearm mailed to another state, because you are moving, "for instance" and don't wish to have the responsibility of guarding a couple dozen guns on the drive, it shouldn't cost you 2,400 dollars to send them. There should be a flat reasonable rate for such things, not 25% of the cost of the gun.