I wish that I could explain the situation in a manner that you folks would believe and accept, but I've tried before and failed. I'll try one more time and maybe find some success. I've worked for both large sporting goods chains and small private shops, all but one of which have gone broke. Here is the real story from the inside. There are essentially two routes for a retailer, large or small, to acquire new firearms: 1) from the manufacturer; or 2) a distributor. Buying from a manufacturer has several problems. First, you probably will have to provide the manufacturer a complete financial statement, regardless of how you are going to pay for the merchandise. Second, you will required to purchase a specific amount of merchandise to qualify as a direct dealer, and that may be divided into catagories so you are required to include merchandise you know you can't sell. Third, even if you qualify as a direct dealer, you will be placed into a catagory depending on how much you sell, and will be offered new items and discounts accordingly. Fourth, some manufacturers have protected areas which means that you might not qualify no matter how much you want try because somebody else already has that area. Fifth, just because you're direct with a manufacturer doesn't mean you will get good prices, because you will find distributors sometimes underselling manufacturers. Yes, I know it's hard to believe but it happens all the time. This leads to the second route for purchasing new firearms--distributors. In ther entire US, there are only about a dozen large firearms wholesellers and maybe two or three dozen medium or small wholesellers. First, that means your options are pretty limited. If you are a small shop and a customer wants a specific firearm, it isn't unusual to call all of them. Yes, you have to call them. That leads to the second problem. Even if you are linked to the distributor by computor, there is no guarentee that the inventory shown on the computer is actually there. Third, even if you find distributor with the lowest price for you, that doesn't mean it is the lowest price for other dealers. Distributors have a price and availabity structure that ranks dealers. The distributor may have the item you want but it's on "allocation" which means only the biggest dealers get it and then often they have to buy lots of other stuff. Fourth, if you find what the customer wants, unless your order reaches a certain dollar amount, you'll probably have to pay for shipping and most of the distributors use UPS or FedX which means at least $25 to the cost of a single pistol. Fifth, the small dealer can't compete with places like Wally World, Dick's and Bass Pro on things like ammunition because the big places use them as loss leaders. The big places often sell ammunition for significantly less than the wholesale cost from the distributor even before shipping.
What all this boils down to is this. Let's look at a new Glock. The last shall shop I worked for operated on a 10% margin, but in reality it was less than that. We were a master Glock dealer, but we seldom bought from Glock because of price and quotas. The cheapest we could find new Glocks was was between $410 and $430. Distributors would call and tell you they had a hot sale on Golcks which would mean $407. To them three dollars was supposed to be a big deal!!!! Well, if we bought some for $407 and some for $430 and marked them each up 10%, there would be different prices on the same item. To be consistent we usually sold Golcks for $430 + 10% + rounded to the nearest $9.95 = $479.95. The first problem was that people would always want us to come down. Generally they would offer $450 and expect us to be happy making $20. When we we honest and told them that would leave us with only $20, they thought we were lieing. Then they would say, well, at least don't charge tax. That was another 6.5% which meant our profit was something like 3.5%. The second problem with that is you can't make enough even at 10% to cover the overhead of a shop but if you charge more the customers think you're too high because "we got computers too ya' know!" During the summer months, Glocks dry up and you may have to pay $465 wholesale. But our customers knew we sold them the rest of the year for $479 so they either wouldn't buy or buy and never come back because we "robbed them." At one time we actually paid more than $479 for some and tried to sell them for $529. They just sat there and we eventually sold them for less than we paid for them. In another case, a good customer quit using our shop when we refused to give him the manufacturers coupon that came with a special pistol he had ordered. The coupon clearer said it was for the retailer to use, not the consumer, but this guy had a friend who had purchased one from a kitchen talbe dealer and that guy left the coupon with the gun, so our guy wanted it too. The point is, even when the manufacturers try to give the dealer a break, it often doesn't work. The bottm line is that unless you find a local dealer with whom you can develop an honest, fair relationship, the small dealers will continue to disappear until there aren't any and you won't have any body to receive your great internet buys. I hope that helps make things a little clearer. If you have any questions you think I might be able to answer, please ask.
RKBA!
I have wondered too about the lack of good local shops and would be very interested in hearing from other industry "insiders" on their take on the current state of running a gun shop ect... Maybe I should start a new thread on the current state of gun shops ect...?
