Are you buying ammo at higher than market prices?

[AKElroy]

Gee. More speculation. If anyone needs to know about produce prices let me know. I can give you some factual evidence based on many years experience in the business. Doesn't anyone on this forum work in the ammo business?

Pricing in the produce market actually makes my point. Prices are set based on supply that will be immediately consumed. No one stock-piles perishable items for resale later. Beef is a great example; the market price is ultimately driven by what people eat. With a multiple-year drought in cattle producing states, supply is lower, but people still eat. Prices go up.

With this ammo situation, it is being driven by high demand for inventory creation, not consumption. That supply will drive prices down as soon as inventories reach their saturation point.

In other words, hoarders are creating a temporary blip, and the supply they are garnering will precipitate a big drop. They are both the cause and the cure.

 

[Sam1911]

With this ammo situation, it is being driven by high demand for inventory creation, not consumption. That supply will drive prices down as soon as inventories reach their saturation point.

To be completely fair, though, that's speculation TOO. Demand is driven here by BOTH what people are shooting up and what they're storing away. No one can really say which is happening in larger numbers, only that both things are happening. It does stand to reason that there is some saturation level which will eventually top off the personal inventories of all the "stack it deep" folks, and when we hit that point (maybe we're starting to reach that now?) their demand will drop out of the market which will free up supply, which will lessen the pressure on others, which will help them reach their saturation point, which ... (and so on) ... until we're really only left with ammo for consumption driving the market.

But it just cannot be accurate to say either, "the market is driven by all the new shooters shooting up ammo and it will always be this way," OR, "the market is driven by stockpilers and one day soon they will all be full and the demand will vanish."

It's some kind of balance of forces.

 

[AKElroy]

Which would be one reason manufacturers might NOT be investing $30 million or so in a new production line, even in the face of "unprecedented demand." They have to play the long game. If they're still paying off a gargantuan investment in 2020, but the bubble totally burst in 2015 and their new production plant is either a) sitting idle, or b) churning out ammo that now hardly sells at $0.02 a round, their company will go bankrupt.

Precisely. The fact that they are NOT making these huge investments is a great sign for us that the real money interests expect prices to drop dramatically. Even a moderate increase in price, if permanent, would have them building capacity aggressively.

 

[Sam1911]

The fact that they are NOT making these huge investments is a great sign for us that the real money interests expect prices to drop dramatically. Even a moderate increase in price, if permanent, would have them building capacity aggressively.

Do we know for a fact that they are NOT? I was under the impression that some manufacturers were building new production, but now can't put my finger on it.

 

[AKElroy]

ut it just cannot be accurate to say either, "the market is driven by all the new shooters shooting up ammo and it will always be this way," OR, "the market is driven by stockpilers and one day soon they will all be full and the demand will vanish."

It's some kind of balance of forces

I will agree with you to this extent; prior to the current craziness, ammo speculation was not a significant part of the market. Now it is, and folks have made money on it. A new industry has been created, and while ultimate supply/demand will get prices lower at some point, the speculation industry that has cropped up will add a lot of volatility to the mix that we did not have to deal with previously. Wild pricing swings may be the new norm, even though the over-all average pricing will match long term consumption over time.

 

[AKElroy]

Do we know for a fact that they are NOT? I was under the impression that some manufacturers were building new production, but now can't put my finger on it.

I've read numerous articles on this, and they all have a similar theme. "We are adding prudent production and operating at maximum capacity to meet this market need". Remington is the only manufacturer I am aware of that has actually expanded; they added a factory that they had planned and started well before this current crisis.

I will attempt more research on this.

 

[Sam1911]

I think that Remington plant was what I was thinking about, but I had something regarding CCI/Blount in my brain, too but don't see anything now.

 

[Agsalaska]

No, it does not. The pricing policy is determined by larger retailers on a number of factors, not the least of which is where will we be when the inventory creation (hoarding) ends, and our shelved are full of LR? Mega retailers take a very long view of supply and demand, and seek to match pricing to actual consumption as the best long term strategy.

We will eventually be where we have always been, selling to meet the consumed demand, and competing with every other retailer with likewise full shelves. That limits pricing opportunity even further for the retailer, and prices fall.

Since I do believe this shortage is driven by inventory creation, then I likewise believe we have a tremendous supply growing in the marketplace. That will result in a big drop at some point, and if the supply at that drop exceeds where it was relative to demand back in 2012, which it will, then prices will fall below that point.

That is all correct. But it doesnt change the fact that the problem starts with the big box retailers. All you did is explain why. And tou are right and I agree with you. But the trigger on the price pproblem still begins with the underpriced goods.

 

[Tirod]

The overall result is that "somebody" IS buying the ammo, the shelves are still empty in places like Walmart. They haven't jacked up prices to slow down consumption, and those who want a box or two at their low retail price make the effort to show up early.

Those who are willing to pay more ARE paying more and see the price IS the market price.


That leaves the ones who point out they can't and won't pay high prices, accuse "hoarders" of making things difficult, and "scalpers" of horrible gut wrenching immorality selling at "above market price."

Nope, not happening that much. Buying a few boxes at a time is the province of someone shooting a few boxes at a time. Shooting is still going on. Hoarders - preppers - whatever - order crates and pallets, they are getting their's too, just waiting for it. Scalpers? Again, I'm waiting to hear from the hundreds of forumites about being propositioned in the halls of work or on the street "Hey, buddy, need some ammo?" It's about as mythological as someone trying to sell you pictures of your sister. It's urban myth. There are no scalpers. Do you see them lined up along the road outside your favorite shooting range with signs and crates of ammo?

Nobody is buying ammo from "scalpers." They are buying from vendors who are pricing it at MARKET PRICES, not the undervalued nearly no profit pricing that Walmart exercises as a loss leader right now to get you into the store. 'Cause, if you walk into the door, you will think of something else you need, and they do make profit on that.

It's why my wife and I don't shop Sam's Club anymore, the impulse purchases were more than the few necessities we needed.

Sam's right, Walmart is pricing things at their normal markup and it's creating an artificial standard. But the marketing aspect isn't them being high minded and ethical about it - they wouldn't bother if the add on sales weren't there.

Everybody else is simply marking up their normal percent over cost. And of course, there are a few who go much higher - but who can't find something on the internet that is price way over typical retail?

Case in point, I'm looking for a MFT Minimalist stock in Foliage Green. MSRP is about $59. I've found them as low as the high $40s, all the way up to $119. Most aren't in stock. Do I post up threads about the outrageous scalpers who are on the market at double the MSRP?

Hundreds of threads over the internet are, concerning ammo prices. NONE of the posters are buying it, tho. And those who do don't seem to mind.

So what we really have are some people upset at change and who are dragging out extreme examples to justify their view. And I see it as exactly the kind of thing that could play to the anti gunners benefit. When people complain "It's not FAIR!" what they are saying is "We can't play at the new level of competition and we want to institute new rules for force the game to accommodate us!"

And yet, Walmart IS doing that, and what do we hear? "Those scalpers are lining up and beating me to it! I DEMAND ammo be on the shelf waiting until I show up and buy it in my good sweet time."

It's a child's temper tantrum, and frankly, I don't blame the mods for killing the threads at all. It's not really hoarders or scalpers, it's a very egotistic view that the world cater to someone's personal desires and act in a manner to suit them, regardless of the realities of the marketplace. Because they won't get in line at Walmart, or pony up the price, they create fictional characters to blame, because they won't take the responsibility for their inaction. They just make up excuses why they choose to stand on the sidelines and try to save face doing it.

 

[jcwit]

So the general consensus among some of the members here is that the largest company in the world, the largest retail giant in the world, the largest retail giant in the history of mankind, the largest employer in the U.S. short of the government, has no idea what they are doing.

OK, its clearly obvious then that I'm the dumbest, stupidest, most ignorant sob that ever walked the face of the earth, right along with the giant Wal-Mart.

BTW, I'm not standing on the sidelines saving face, my stockpile will more than likely last my lifetime, 30 to 40 thousand rounds last a long time.

 

[Agsalaska]

Ckon man. Nobody is claiming that wal mart, which is bei n g used as a term to cover all big box retailers, doesnt k n ow what they are doing.

And your self loathing and self ridicule rants are borderline ridiculous.

 

[jcwit]

Nobody is claiming that wal mart, which is bei n g used as a term to cover all big box retailers, doesnt k n ow what they are doing.

Oh really? Check this.

They are buying from vendors who are pricing it at MARKET PRICES, not the undervalued nearly no profit pricing that Walmart exercises as a loss leader right now to get you into the store. 'Cause, if you walk into the door, you will think of something else you need, and they do make profit on that.

This claims that W/M is using ammo as a loss leader so the same few folks can pick it up every shipment day in the hops they will buy a loaf of bread. If in fact this is the case it supports my comment that they do not know what they are doing.

And your self loathing and self ridicule rants are borderline ridiculous.

Can't see or understand sarcasm when you see it, can you?

 

[Mike1234567]

Okay... I had to quit reading all the posts. It's just too painful because I disagree with so much that's written. The good, the bad, the ugly... this ammo debacle is all that combined.

To those who state that we can buy .22 LR from WM (or wherever) at a fair price; It's just not true. Maybe some of us can... just not in my area and after reading the majority of posts in the majority of these types of threads I can state without reservation that's the reality for most of us.

Frankly, I don't even care about the price of rimfire cartridges anymore. To be completely honest, at these crazy prices and/or impossible-to-find shortages, I don't need it. I'll shoot pellet guns and centerfire.

I can't trust myself to reload anymore but I'll be buying the equipment and supplies anyway and will barter to have someone I trust reload for me... I'll just be a second set of eyes. Even losing some of the cost savings to labor... it'll still be cheaper than buying factory loads and cheaper than rimfire... at least .22 WMR at 40 cents/rd. I'm done with rimfire. In fact, I'm going to sell my Rem 597 WMR on GB soon.

 

[Agsalaska]

Oh really? Check this.



This claims that W/M is using ammo as a loss leader so the same few folks can pick it up every shipment day in the hops they will buy a loaf of bread. If in fact this is the case it supports my comment that they do not know what they are doing.



Can't see or understand sarcasm when you see it, can you?

Ok. Fair enough. That is a pretty ridiculous claim.

But the claim that myself, sam, and others are making that they are underpriced to market value is not to call them stupid. I though that is what you were referring too.

 

[jimmyraythomason]

Hmmm.... 10 pages of "discourse" and yet the price and/or availability of ammo remains unaffected....curious.

 

[jcwit]

YUP, Jimmy, that is the larger conundrum. A problem with no solution.

In reality we are our own worst enemy.

 

[Sam1911]

So the general consensus among some of the members here is that the largest company in the world, the largest retail giant in the world, the largest retail giant in the history of mankind, the largest employer in the U.S. short of the government, has no idea what they are doing

Nope. I thine we've said over and over that they know EXACTLY what they're doing. They're holding their prices well below the market rate for long term strategic reasons that they feel will benefit WalMart. Keeping folks coming in the store, holding their bargain reputation, etc. good for WM. Not very good for the market or the shooting public. No good for the local gun shops. Not at all good for the morally outraged types who hate scalpers!

OK, its clearly obvious then that I'm the dumbest, stupidest, most ignorant sob that ever walked the face of the earth

This again? Well, ok. If that's how you feel, I'll believe you. But it makes me sad.

BTW, I'm not standing on the sidelines saving face, my stockpile will more than likely last my lifetime, 30 to 40 thousand rounds last a long time.

Again, that's neato, but wholly non-supportive of your opinions.

 

[Sam1911]

No. No solution. It doesn't NEED a solution. It is the market at work, it will sort itself out and find its own new level in time, and no meddling will make things better.

 

[jcwit]

From another forum that I frequent now and then.

Today the regional representative for Winchester stopped by the store. He visits every so often to inventory our guns, see what sells/doesn't sell, and to answer our questions. I asked him numerous questions about Winchester's 22 production numbers, predictions, and issues. Below are a few questions I asked and the answers I received:



Does Winchester produce 22 all year or only in short production runs?

Winchester produces 22 all year long.



Has Winchester begun producing more 22 ammo?

Winchester has increased production of 22 by 25% over the last year. They do not expect production to increase much above current levels in the near future.



Why isn't more 22 being produced and how come Winchester is not increasing their manufacturing capability?

A vast majority of the ammunition that Winchester produces, including almost all centerfire ammo, is produced on automated equipment. Once the machines are set up, it takes very little human input to produce centerfire ammunition. Rimfire ammunition produced by Winchester, especially 22, is not made on the same automated machinery. The 22 machines require a much higher amount of human interaction than the centerfire machines. Winchester is not interested in investing a lot of money in new automated machinery nor do they want to hire a bunch of people to run the rimfire machines. Winchester believes that the 22 shortage will last a long time, but is still a temporary bubble. When the crisis is over with, many people will have vast stores of ammunition and won't be buying more 22 for years to come.



When does Winchester predict that the 22 shortage will be over and everything will return to normal?

If Winchester's orders and demand went to pre-panic levels tomorrow, it would take OVER TWO YEARS for Winchester to catch up. At current demand, Winchester predicts that it will take significantly longer than two years to catch up considering that individuals are likely to panic after another shooting or election cycle. In the opinion of the rep, based upon his knowledge of production, it will be well OVER FIVE YEARS before 22 returns to normal. He also said that Winchester, along with other manufacturers, are going to be raising their prices in the near future. Winchester believes that price increases are necessary to not only cover increasing costs, but to also reduce demand.

 

[Dreamliner787]

Waiting for prices to go down as more supply is available, my worry is that for some ammo the current prices might be the new norm.

 

[jcwit]

Again, that's neato, but wholly non-supportive of your opinions.

Correct, but at the age of 70 + I have no time to act otherwise. Younger folks may have other options.

 

[jcwit]

No. No solution. It doesn't NEED a solution. It is the market at work, it will sort itself out and find its own new level in time, and no meddling will make things better.

So you say there is no solution? But then you imply that the market is in fact the solution.

 

[jcwit]

This again? Well, ok. If that's how you feel, I'll believe you. But it makes me sad.

Sam you need to read posts closer, post #229, my quote to the remark.

Can't see or understand sarcasm when you see it, can you?

 

[huntsman]

When people complain "It's not FAIR!" what they are saying is "We can't play at the new level of competition and we want to institute new rules for force the game to accommodate us!"

We're witnessing fundamental changes in this country and some are having a difficult time adjusting. The way forward is to adapt and I agree there's some whining and a whole lot of denial but that's what the spoiled do and IF the current gun community is anything it's spoiled IMHO.

 

[Sam1911]

Waiting for prices to go down as more supply is available, my worry is that for some ammo the current prices might be the new norm.

As I've said, though, is that so bad? There is a chance, however remote, that this IS the new norm. Do we complain if our next generation of shooters accepts that and keeps shooting? And if they're proved wrong and the prices fall, what a happy surprise for them!