How to fix the ammo "shortage."

[Shiban]

It's simple really,

Stop buying ammo at inflated prices.

This imo, is the absolute, perfect solution. I refuse to buy at these inflated prices. I would much rather go without.

 

[Lonestar6]

If you believe you need ammo, there is ammo available in any caliber you want, just check gunbot. Don't like the price than don't buy it.

 

[Hohn]

This imo, is the absolute, perfect solution. I refuse to buy at these inflated prices. I would much rather go without.

You and I both. We are anecdotal proof that the higher prices constrain demand, the whole theme of my OP.

 

[the1kidd03]

You and I both. We are anecdotal proof that the higher prices constrain demand, the whole theme of my OP.

Actually, the theme of your OP is under the assumption that prices dictate supply and demand over an entire market, which it cannot. Supply and demand dictate prices in the market, as we are currently seeing.

A business can make the attempt to increase prices in order to slow down sales, but it will not affect the overall market and therefore he will just sit on his product. There's no point to that unless he just doesn't want to make as much money as he could be. Hence, equilibrium pricing.

 

[Hohn]

Actually, the theme of your OP is under the assumption that prices dictate supply and demand over an entire market, which it cannot. Supply and demand dictate prices in the market, as we are currently seeing.

A business can make the attempt to increase prices in order to slow down sales, but it will not affect the overall market and therefore he will just sit on his product. There's no point to that unless he just doesn't want to make as much money as he could be. Hence, equilibrium pricing.

Prices don't dictate demand per se-- they dictate the quantity demanded. Demand is a curve, with different quantities corresponding to different prices. The equilibrium price is where supply and demand curves cross. You had that in basic econ.

Prices are neither thermostat nor thermometer. They are BOTH. Supply and demand set price and price sets supply and demand.

True, no one retailer can singlehandedly correct an anomalous market condition. But when certain outlets are responsible for sizeable fractions of the retail market, they CAN influence the market. You think that all of ATK's resellers raising prices wouldn't move the market? I disagree.

Say that Gander raises prices. WMT gets the ammo, scalpers come in and clean them out. You go looking for ammo. You can either pay the Gander price (who still have some in stock) or pay even more online from the scalper-- plus shipping.

Under my concept, the retailer would make MORE profit, not less. The higher prices don't affect the total quantity sold-- just the amount of time it takes to sell that quantity. Why? Because you are supply-limited. You seem to think the price increase would be the difference in a total quantity sold. This is where your analysis is wrong. If you weren't supply-limited, you'd be right.

Think of it from the opposite way. You can't sell any MORE at a lower price because of the supply constraints. Equilibrium price is HIGHER than the actual selling price-- hence the shortage.


H

 

[38special]

I agree with the concept to an extent. Ammo sitting on the shelves do retailers no good. They want to move product and make money.

From a retailers perspective, I'd sell at a higher price than now, but still a low enough price to sell it all and move more product so I maximize my profits.

So armslist prices wouldn't work. It would sit on my shelf and that doesn't make me money.

 

[Hohn]

I agree with the concept to an extent. Ammo sitting on the shelves do retailers no good. They want to move product and make money.

From a retailers perspective, I'd sell at a higher price than now, but still a low enough price to sell it all and move more product so I maximize my profits.

So armslist prices wouldn't work. It would sit on my shelf and that doesn't make me money.

Exactly right.

If you end up with ammo not moving, the price is obviously too high.

But it should be just as obvious that ammo that sells out in 20 minutes is priced too low.

 

[38special]

Exactly right.

If you end up with ammo not moving, the price is obviously too high.

But it should be just as obvious that ammo that sells out in 20 minutes is priced too low.

Agreed, but with demand at the current rate you still want to price it where it sells out *every* time it hits the shelf, fairly quickly, at least to the point that you can get more.

For instance, if a box of 9mm sold for $28 in (on average) 6 days and you (on average) got more 9mm every 12 days, your price it just high enough to take (on average) about 11 days to sell. If it sits longer, the price is too high.

This is just common sense for a business, excluding the possibility of customers not liking you and thus not coming back in the future. That's another factor to consider for sure.

For a company like Walmart, wouldn't matter. People often say they'll never go back to places, but if Walmart has it for $3 less than everyone else in 4 years...that's where *most* people will go.

Some smaller gun shops don't have this luxury and have a future business loss potential that makes them keep prices lower to keep "loyal" customers.

The gun business is somewhat unique in that regard. Gun owners find certain shops they like and continue going back. We're loyal.

Loyal to Walmart? Only when they have the lowest price around by a long shot...

 

[Hohn]

I think you nailed it.

 

[Broom_jm]

It's simple really,

Stop buying ammo at inflated prices.

It really IS this simple!

Ironically, the OP is naively thinking that the solution is to pay much higher prices, and is advocating that retailers charge much higher prices. Frankly, he only seems to understand one HALF of the free market equation!

There are two sliding scales that determine the selling price of dang near every consumer item: The price most retailers attempt to charge and the price most consumers are willing to pay. The fatal flaw in the OP's theory (which is patently obvious to many) is that if just a handful of proprietors refuse to charge inflated prices, most consumers WILL NOT BUY from those who do!

It's like this: If there are 10 car dealerships in town and 8 of them sell cars for 20% more than the others, guess what happens? The other 2 dealers sell a crap-ton of cars! DUH!

The OP is proposing system-wide price collusion! Makes me wonder if he has a government job, or something. The ONLY way his "system" would work is if there were only a handful of outlets for buying ammunition or components, and they were all on the same page with what they will charge. Even then, it's not as easy as he's trying to make it sound...look at the long-running attempts at collusion in the diamond industry.

As long as there are enough consumers who refuse to pay more than something is worth, and as long as there are enough reputable business owners, who refuse to charge way more than something is worth, the system will continue to work just as it always has...which is NOT what the OP has proposed! (Heck, even Econ 101 covered this!)

 

[Bapak2ja]

Looks like Cheaper Than Dirt is listening to the OP. Based on what I have read here on CTD will lose huge market share and their product will sit on their shelves until a very hot place has a thick sheet of ice.

Ammo 9x19mm PMC Bronze Full Metal Jacket 115 Grain 50 Round Box 1150 fps 9A

Ammo .40 S&W PMC Bronze FMJ 165 Grain 50 Round Box 985 fps Practice And Target Ammunition

http://www.cheaperthandirt.com/product/AMM-3190

The most popular caliber is ~500% over what I used to pay ($12/50 last year; $70/50 now).

Go ahead, raise prices. When the dirt settles, CTD will have a lot of unsold ammo and a great deal fewer customers.

 

[Whitsettd8]

Look at the traffic Walmart gains by having that low price on ammo. if Walmart see's 500 people a day walking into the store just for ammo and they are completely sold out more than likely those people will purchase something of some nature.

 

[mikem1]

what sucks is right now I can't get get ammo to take my wife and kids and grandkids shooting, they need the practices. oh and I like to doit.

 

[cmamath13]

Looks like Cheaper Than Dirt is listening to the OP. Based on what I have read here on CTD will lose huge market share and their product will sit on their shelves until a very hot place has a thick sheet of ice.

Ammo 9x19mm PMC Bronze Full Metal Jacket 115 Grain 50 Round Box 1150 fps 9A

Ammo .40 S&W PMC Bronze FMJ 165 Grain 50 Round Box 985 fps Practice And Target Ammunition

Ammo .380 ACP PMC Bronze FMJ 90 Grain 50 Round Box 920 fps Practice And Target Ammunition

The most popular caliber is ~500% over what I used to pay ($12/50 last year; $70/50 now).

Go ahead, raise prices. When the dirt settles, CTD will have a lot of unsold ammo and a great deal fewer customers.

WOW! All for the LOW PRICE OF $70!!!

 

[Dauvis]

As long as there are enough consumers who refuse to pay more than something is worth, and as long as there are enough reputable business owners, who refuse to charge way more than something is worth, the system will continue to work just as it always has...which is NOT what the OP has proposed! (Heck, even Econ 101 covered this!)

Only thing I know for certain is that the big box retailers are selling at well under the current fair market value. I am sure they have their reasons for doing so. Frankly, it their business and they can run it how they choose.

To use the car analogy, if the eight dealers are selling at fair market value, they will sell their cars (just not as fast of the other two). The two dealers who are selling at below fair market value might be able to sell more if and only if they are able to keep cars inventory. It takes time to build a car. It would do those two no good if they have no inventory to sell.

When you have a behemoth like Wally World involved, competition is not perfect because they have such a huge economy of scale. To a point, Wally World can control the pricing of the ammo. My prediction is that if Wally World raises its prices, it will have a rippling effect and you will see Gander Mountain, Meijer, and the LGS raising their prices as well.

what sucks is right now I can't get get ammo to take my wife and kids and grandkids shooting, they need the practices. oh and I like to doit.

You, me, and God knows how many other people

 

[38special]

It's like this: If there are 10 car dealerships in town and 8 of them sell cars for 20% more than the others, guess what happens? The other 2 dealers sell a crap-ton of cars! DUH!

You are correct to a point....but there is currently a problem with this theory.

To use the car analogy, if the eight dealers are selling at fair market value, they will sell their cars (just not as fast of the other two). The two dealers who are selling at below fair market value might be able to sell more if and only if they are able to keep cars inventory. It takes time to build a car. It would do those two no good if they have no inventory to sell.

This is where we run into a problem in today's market.

In a normal market, what Broom pointed out is definitely true. In today's market, the product sells and FAST no matter who has it, to a certain point.

$70 for 50 9mm isn't going to move. $25-30 probably will.

If LGS "a" sells 9mm for $13 right now, it will all sell out, fairly quickly.

If LGS "b" sells 9mm for $25 right now, it will all sell out, fairly quickly.

Will people check "a" first? Sure. Just like they do now with Walmart. Bu they'll go buy it from "b" or even "c" who has higher prices because the inventory just isn't there.