How to fix the ammo "shortage."

[Sgtusmc]

I have a decent supply of ammo for my various calibers. .223/5.56 I could definitely use a lot more of, but I'm holding off on going to the range AND I've held off on making any additional ammo purchases for the past 2 months. Just trying to do my part in stopping this panic.

 

[Hohn]

Exactly. First it was brass/components used as an excuse to raise ammo prices and now its "shortages". If you continue to pay the price they ask for, it will never come down. People will get accustomed to the price gouging and the prices will stay where there are or very close to the price gouging level. Gasoline is a prime example of that.

In central IL 87 octane was 89.9cents per gallon in 1989. Gasoline has quadrupled+ since then.

Emphasis mine. That's the whole point. If they raised prices far enough, people will NOT pay that price (as I did by refusing to pay Gander $1.60/rd for HST).

For several reasons I won't go into now, prices almost always rise faster than they fall. For certain kinds of commodities, they can fall reasonably fast, though.

My local source of diesel fuel as dropped from 3.85/gal to 3.67/gal in just a week. Not a huge drop, but significant, I think.

Ammo has a lot more elasticity of demand than diesel of gasoline, which means ammo prices can come down much faster than motor fuel prices.

I don't know that we'll ever see $12/50 for WWB 9mm, but it sure as heck will go lower than this temporary insanity-- IF we let the market work.

Alas, most folks lack the patience, understanding, or both to let it do its thing.

H

 

[Bapak2ja]

Looks like Cheaper Than Dirt is taking the advice of the OP.

Ammo .22 LR Armscor Solid Point 40 Grain 500 Round Brick Standard Velocity 1135 fps

The last five bricks of Remington .22LR I purchased only cost $22/brick, and I got a $5 rebate from Gander Mountain. Does anyone really think this will help slow the panic buying? Just curious.

 

[Hohn]

Looks like Cheaper Than Dirt is taking the advice of the OP.

Ammo .22 LR Armscor Solid Point 40 Grain 500 Round Brick Standard Velocity 1135 fps

The last five bricks of Remington .22LR I purchased only cost $22/brick, and I got a $5 rebate from Gander Mountain. Does anyone really think this will help slow the panic buying? Just curious.

Great that you could find it at Gander.

What about all the other shleps that can't stalk the delivery trucks?


CTD is free to charge whatever they want. I assure you they didn't have that price this time last year. Go to this main .22LR page and note the overwhelming majority of .22LR is out of stock:

http://www.cheaperthandirt.com/ItemListing.aspx?catid=490

Well, look at that-- the same ammo for $23/brick on Mar 10 of last year:

http://web.archive.org/web/20120310210821/http://www.cheaperthandirt.com/ItemListing.aspx?catid=490



What does this prove? My theory works. The expensive ammo is still in stock. Lots of things are not in stock.

Demand has changed. Possibly permanently. That means prices have to rise until supply is expanded to meet that demand, at which point prices will come down to something lower than the shortage price (but likely higher than pre-shortage pricing).

And an expensive meal will ALWAYS be better than starving.

H

 

[Rob377]

Looks like they're stuck paying a $150/brick. Time = money, right?

 

[Sgtusmc]

Stalking walmart delivery trucks has become a past time for some.

 

[the1kidd03]

Major corporations aren't trying to or interested in manipulating the market of any item.

That's not how efficient businesses operate and that's not how to properly price an item. Hence, the big chain stores like WM and Gander have raised their prices relatively little and the small mom and pap places is anyone's guess.

 

[Hohn]

Looks like they're stuck paying a $150/brick. Time = money, right?

Yes, but very different amounts of money for different people. Some folks have the time to stalk delivery trucks. I don't. I have a job and am going to night school and put in 60hrs or so a week between the two.

If I *really* wanted .22LR, I would pay $120 a brick, absolutely.

After all, .40SW is about $400 for that same round count. Shooting .22LR is still way cheaper than .40SW.

But I don't feel strongly enough about .22 to pay that amount. So I don't buy. I'm one of those people that represents the reduction in the demand quantity as a result of a price increase.

I'm sure several others are in the same boat as I am.

Others really want ammo and will truck-stalk or write huge checks to get it. That's fine. Eventually their time won't be worth it or the bank account will catch up to them.

Long term, a brick may only come back to $40 or so. Who knows?

But I'm pretty confident that it will never be as cheap as $23 again, nor will we sustain pricing of $120.

H

 

[Hohn]

Major corporations aren't trying to or interested in manipulating the market of any item.

That's not how efficient businesses operate and that's not how to properly price an item. Hence, the big chain stores like WM and Gander have raised their prices relatively little and the small mom and pap places is anyone's guess.

What's the difference between manipulating a market and responding to changing market conditions?

You don't think WMT 'manipulates' the market by squeezing supplier for continual price reductions?

If I were running Gander, the ammo that sold out fastest would get $1/box price increases every week until it went 5 days before selling out.

I put the onus on the retailers more than the ammo manufacturers. After all, most suppliers are on long-term contracts with ammo companies. ATK can't just suddenly crank up prices to Gander just because the market has gone crazy. They are contractually bound to deliver certain qtys at certain prices.

Gander, OTOH, can crank up the price until it's sales rate is better synced to the supply flow. They are fools NOT to do this.

If for no other reason than you can be VERY confident that ATK will be raising the price to Gander a LOT when the next contract comes up for negotiation.

 

[the1kidd03]

It's simple, really.

Prices are FAR too low.

Retailers need to crank up the price until the rate at which ammo goes out the door gets closer to normal.



Retailers that crank up the price do a couple beneficial things:

1. Undercut the scalpers. The scalpers exist because the huge gap between what people are willing to pay and what they can buy it for at the big box store. If WMT and Gander has the "armslist" price on the shelf, the scalpers go away and the shortage disappears. Yes, in theory.
2. Increase the cash going to ammo companies. This can increase capacity and stimulate more production to the market - Not exactly. Companies, especially larger ones don't operate on a whim like this. They think in the long term vs short term for the longevity of the organization. They also have appropriated budgets just like anybody else. For them, they have to have proof that demand will stay at its current level before they're willing to invest in further costs that they'll have to maintain 1, 5, or 10 years down the road. If they ramped up production through more investments and demand drops, they just dug themselves in a VERY deep hole.
3. Increase the cash going to others in the supply chain-- producers of raw brass, forming dies, production equipment, etc. More production is stimulated -See above, #2 response

The bottom line, economically, is simple: shortages are the result of interference with the price system. If we let prices do what they are supposed to do-- communicate market information and thus balance supply with demand-- then the problem largely resolves itself. Shortages are a result of demand increasing without suppliers being prepared for it. Pricing is a manipulator, but with every choice comes pros and cons. Big companies know that investing in the interests of their consumers they are making more customers in the long haul. Typically, it's smaller companies which manipulate prices extravagantly.

ATK, Remington, Black Hills et al are obviously selling their ammo too cheap to the big box stores. The big box stores can then sell it too cheaply on the shelf. Big name stores typically have contracts worked out which they must contend with where the supplier has agreed to provide products at certain rates. Without the company's size and inherent buying power, smaller stores don't have the ability to take advantage of that kind of authority in deals.

If ANYONE in the supply chain would do the right thing and raise prices to what they SHOULD be as a result of the spike in demand, then this problem would resolve itself much more quickly. In theory it seems sound. Many of those who do will also lose a great number of customers. Those of sound business practices will ensure a loyal customer base for many years to come. Often, smaller privately owned businesses aren't looking that far ahead and would rather take advantage of a situation.



I've been looking for some .40cal HST defense loads. I finally found some at Gander for $33/20! I left empty handed because the price was too high for me.

If you raise prices high enough, people en masse will similarly say 'that's too high' and leave the ammo on the shelf. Shortage resolved.

When people see ammo STILL on the shelf, they realize the shortage is over and demand slackens. When demand slackens, the prices will drop back down.


I'm frankly surprised that WMT and Gander are so clueless that they continue to let scalpers claim their profit. Again, they're not interested in manipulating the items' market. They know what they need to make on a product and how much of it to satisfy all of their overhead and stakeholders, and that's how they price.


If I am in business leadership responsible for selling Ammo at WMT or Gander, I'm firing the moron that's keeping prices so low we can't keep any inventory in. -Not really. It's not their job nor is it cost effective to babysit the market for specific items with the amount of buying power they have. WMT and Gander like to think they are helping customers by keeping prices low. They want you, the customer, to think they are looking after you because they know in the long run that will gain them more business and more loyal customers. But they aren't. They are hurting customers by prolonging the "shortage" and hurting themselves by letting scalpers claim profit that they could just as easily claim. This is mostly the result of setting prices at the corporate headquarters (where they aren't was informed about the local market). Let your local store/department managers set ammo pricing, raising the certain items by $5 or $10/box until they can go more than a couple days before selling out. Then you will have far fewer people buying up ammo in GA and reselling to CO over the internet because of the vastly different market prices in two locales, for example.

I wouldn't charge the same for bottled water in the Sahara as I would in Colorado, so why not let ammo prices reflect local demand?

The "Right' price is the one that keep ammo on the shelf until the next truck shows up. - No, the right price is sometimes referred to as an equilibriium price. Taking what you know you can sell at a certain price weighed against that of what you know you cannot sell at a certain price and determining the proper price to get the most income from the most likely amount of sales. If demand increase, then great you're just making more than you planned to and there's no reason to risk turning away customers by trying to take advantage of it. Ideally, that last box would sell as the truck pulls up. But when you sell out in 20min what takes a week to deliver, you've OBVIOUSLY got prices WAY too low.

Yes, it's a short term inconvenience and an annoyance to have astronomical ammo prices. But it's best to deal with some short term pain and let it pass than it is to prolong the agony forever and ever by defeating the effective work of the price system.

H

My are above in RED

 

[the1kidd03]

What's the difference between manipulating a market and responding to changing market conditions?

You don't think WMT 'manipulates' the market by squeezing supplier for continual price reductions?

If I were running Gander, the ammo that sold out fastest would get $1/box price increases every week until it went 5 days before selling out.

I put the onus on the retailers more than the ammo manufacturers. After all, most suppliers are on long-term contracts with ammo companies. ATK can't just suddenly crank up prices to Gander just because the market has gone crazy. They are contractually bound to deliver certain qtys at certain prices.

Gander, OTOH, can crank up the price until it's sales rate is better synced to the supply flow. They are fools NOT to do this.

If for no other reason than you can be VERY confident that ATK will be raising the price to Gander a LOT when the next contract comes up for negotiation.

Read my previous post.

 

[Hohn]

"losing customers' is the whole point. The price has to increase to reduce demand. That means reducing the number of sales, and most likely the number of people buying.


The root cause of this problem is WE AMMO CONSUMERS. Why? Because we complain about the shortage and then we complain about the high price. Well, which one do you want fixed??

You can't have it both ways. You either pay the higher price and let supply catch up with demand, or deal with scarcity and the scalpers and truck-stalkers.

 

[the1kidd03]

"losing customers' is the whole point. The price has to increase to reduce demand. That means reducing the number of sales, and most likely the number of people buying.


The root cause of this problem is WE AMMO CONSUMERS. Why? Because we complain about the shortage and then we complain about the high price. Well, which one do you want fixed??

Again, their purpose is not to control the market. The market controls the business and bigger companies understand that. They can use price tactics to control THEIR INVENTORY but it will have little effect on the overall market where there are competitors and they run huges risks of hurting their profitability.

They will both be fixed in time. The surge is do to the current political climate. It will take a while for it to return to normal; much longer than that of firearms themselves because it's an expendable commodity. It will return eventually to more reasonable and stable levels when people are no longer fearing ammunition restrictions and other threats to the market.

 

[Rob377]

The price has increased. See scalpers.

Your whole top-down market fixing scheme here is just to replace individual scalpers with big box retail scalpers. Given that you don't actually think manufacturers will invest millions in expanding capacity for non-recurring panic demand, that seems like a silly shell game.

The market is doing what it does already. It doesn't need your help.

But it's fun to be the contrarian, isn't it?

 

[jcwit]

The question was not if you try to get the best price-- the question is whether you will pay MORE to NOT buy from a particular station that ONCE had a high price..

What if your GasBuddy tells you that the best price in 50miles is that place that "gouged" you three weeks ago?

Would buy from the station from across the street even is I was there anyway. Unless I was certain the station was loosing money on every gal. of gas sold.

 

[nucone]

Why blame retailers when it is the consumer that ultimately determines the price? A prime example is my preferred LGS has plenty of ammo and guns although his inventory is somewhat depleted. Some of it is not on the shelves and is being held back for auction on GB where all his auctions start at $0.01 with No Reserve. I was there this morning and they were boxing up 2000 rounds of .22lr CCI Mini-Mags for shipment to the winning bidder. The final price was $504 plus shipping. The LGS owner told me that he does all his auctions that way and he doesn't feel bad about the price it is selling for because, he didn't set the price. Look it up on GB for seller ID "arksportsman" and see for yourself. It is hard to blame the retailers for market madness as they didn't create it, the consumer did and continues to feed the beast.

 

[Rob377]

Why assume the market needs "fixing"? Further, why assume that the judgment and diktat of the INGO Ammo Commissar is somehow better at "fixing" the so called ammo shortage than the self-interested judgment and decisions of the management at the ammo companies and retailers?

Maybe this is stretch, but I imagine those folks know their respective businesses and the nuts and bolts cost/benefit analysis of pricing better than the OP does. I'm guessing that these big multi-billion dollar operations have far more data on consumers and as a result far more sophisticated pricing models than the Econ 101 stuff here. Totally out there crazy talk, I know.

But everyone wants to be a central planner, I guess.

 

[Tim Enyeart]

If we had good elected officials that refused to create a crisis and use scare tactics to provide useless alternatives, this discussion wouldn't be needed.

 

[Dauvis]

Gander, OTOH, can crank up the price until it's sales rate is better synced to the supply flow. They are fools NOT to do this

There is the possibility that there is a pricing agreement that keeps Gander or Wally World from raising its prices. Not saying that is what is going but it is a possibility.

Personally, I think things would settle down faster if the big box retailers would charge what is now fair market value. Who knows why they are doing what they are doing.

 

[U.S. Patriot]

It's simple really,

Stop buying ammo at inflated prices.