Price inflation?

[flippydidit]

Wow, I know the ammo ordering is out of this world lately, but I never imagined Bulkammo.com would be jacking up prices like the other guys.

Loose packed LC 5.56 at over a dollar a round?
http://www.bulkammo.com/250-rounds-loose-packed-of-5-56x45-ammo-by-lake-city-62gr-fmj-xm855

Steel cased Wolf .308 at $0.90 a round?
http://www.bulkammo.com/bulk-308-win-ammo-308145fmjwolfwpa-20

I've been considering doing business with your company based off the reviews from others on TSP.  I think I'll just add you to my list of companies to avoid now.

[mdavi65]

I'm with you. I boycotted CTD over this practice, and now this company as well. I've ordered once in the past, but never again!

[DrJohn]

Not related to them in any way: Do you think it's possible that maybe their supplier raised their price and BA is just passing that along?

[Saint-TyR]

The same 5.56 round cost is going on here in NH! So I think it is the cost being pass on. Supply and demand in effect! I would hold off until the supplies come back and people slow down their purchases.

I am holding on buying ammo and looking at other fringe items.

Stay safe!

[NWPilgrim]

Maybe BA could not get any more through normal distribution and they bought some from CTD as last resort!!

It could be widespread chiseling, but seems like at least a few places would reign in prices if possible.  If prices are around $1/rd nearly everywhere then it must be starting at the manufacturer or distributor.

[Mr. Bill]

I've never dealt with BulkAmmo.com and, other than them being a TSP sponsor, I don't know anything about them.

But if demand has risen, and manufacturers have not yet caught up with the demand, then wholesalers and retailers only have three options:

• They can slow down their sales by raising prices.
• They can keep prices low, but ration sales (limit how much any customer is allowed to buy).
• They can keep prices low, sell as much as people want to buy, and run out of stock.

Take your pick.  You can't have low prices and unlimited supply.

Anyway, these businesses are not charities.  They're in business to make a profit.

[nelson96]

Maybe the day has come that manufacturers don't need distributor's?  With people buying so much on the internet, why don't they set up direct internet sales?  There's a good chance that distributors make much higher margins on the sale of these items (especially now), so it's a perfect opportunity for manufacturers to find a middle ground where we have a choice to buy from either or?  Ammo is basically a commodity anyway, let the market determine who is greedy and who is not. 

That said, increased prices at BA may not be a direct result of their own greed, it is a result of their wholesalers greed then, if they are not buying direct from the manufacturer.  I am betting that it's not the manufacturer that raised the prices this quickly (or at all).

Anyway, these businesses are not charities.  They're in business to make a profit.

And thank goodness we have the right to make a choice to buy somewhere else if it is determined that they are making too much profit.  I hope people will remember who those businesses are when supply inceases and they have more choices.
.

[EN]

Gentlemen,

I hope you will accept this in the spirit it is meant.  Not to be inflammatory but to cause us to think instead of reacting emotionally.
I'm not affiliated with any ammo manufacturer or distributor.  I ,however, am tired of hearing people complain about the "greed" of a merchant who would dare to charge what the market would bear.   What do you think every other business in America does?  They are not charities.  If you have not planned ahead and need more ammo right now then realize that you will need to pay the price.  If you don't need it, don't buy it and wait until the panic has subsided.  We cannot castigate a business for making a profit on one hand and then turn around and claim to be for free enterprise on the other.  If they are out of line, people will not buy their product and they will not make a profit.  They will then have to lower their price and compete.  If they don't have to lower their price it means that their competitors are doing exactly the same thing and there is a need in the marketplace that they are filling.

If you can do this better than BA please remember you can put up the multiple tens of thousands of dollars it would take to start a business and go for it.

Cheers,

[16onRockandRoll]

I have to back EN on this. Coming from a guy who works on the other side of the counter at a gun shop, this ordeal is a double-edged sword. There is virtually nothing in the supply chain to order. If we can not resupply ourselves, we can't keep the lights on. Businesses have fixed costs; rent, utilities, insurance, etc. Those don't go down if our incoming supplies are cut in half. If anything, labor costs have gone up because more time is spent ordering and searching for inventory to stock.  Then there is the other problems this has created. Such as shipping delays. Those cost us money as well. One of my vendors, who used to get our orders to us consistently within about 3-5 days, is going on 3 weeks since my last order. Every day that I don't have it to sell, costs us money. Is there gouging going on? Sure. But when the going rate of .223 is $1/rd , and I dont know when I will be able to get any more, why would I sell it for .40/rd?  In all honesty, we could add an additional 20% markup to everything right now, and our sales would probably only go down by 5%. We are not trying to rip anyone off, we are trying to build a monetary buffer wherever we can. Our sincere hope in all of this is that we can build our customer base through this, and come out stronger on the other side. Will that make us more money? Sure. But it will also allow us to better serve more people. We pride ourselves on our customer service, and if anything, we have redoubled our efforts to maintain that to help justify the price increases.

I hope this starts to blow over soon, but I don't know that I believe that it will.

[NWPilgrim]

Totally agree. To cover fixed operating costs and decent return on investment a business can sell 1,000 things for $10 each or if they can only get in 100 items they have charge $100 each.

[BDinVA]

I've been finding Federal .223 XTAC at Wal-Mart for $12-13 / 20 rounds.  Walmart sells at a slim margin above wholesale so that might be a good gauge for where suppliers are.

ATK (parent company of Federal) announced a planned price increase in ammunition due to rising costs of raw materials way before all this started.

So, yes, suppliers are charging more BUT there's no way that the increase has been enough on its own to justify the 100-150% increase in ammo that we've been seeing. 

DEMAND goes up, while supply stays the same, PRICE goes up.  Simple economics.

If you don't want to pay $1/round - stop buying it at that price.  Otherwise, it becomes the new normal until the supply comes back.

[RationalHusker]

Gentlemen,

I hope you will accept this in the spirit it is meant.  Not to be inflammatory but to cause us to think instead of reacting emotionally.
I'm not affiliated with any ammo manufacturer or distributor.  I ,however, am tired of hearing people complain about the "greed" of a merchant who would dare to charge what the market would bear.   What do you think every other business in America does?  They are not charities.  If you have not planned ahead and need more ammo right now then realize that you will need to pay the price.  If you don't need it, don't buy it and wait until the panic has subsided.  We cannot castigate a business for making a profit on one hand and then turn around and claim to be for free enterprise on the other.  If they are out of line, people will not buy their product and they will not make a profit.  They will then have to lower their price and compete.  If they don't have to lower their price it means that their competitors are doing exactly the same thing and there is a need in the marketplace that they are filling.

If you can do this better than BA please remember you can put up the multiple tens of thousands of dollars it would take to start a business and go for it.

Cheers,

+1 from me.  Supply and demand.  Not their fault the boneheads in DC are causing people to buy hand-over-fist.

[nelson96]

+1 from me.  Supply and demand.  Not their fault the boneheads in DC are causing people to buy hand-over-fist.

Those that feel this way makes me wonder if they would still feel the same if they didn't have any ammo and felt they needed to supply themselves at these prices.  Would they feel this way if the cost of toilet paper, electricity, or fuel went up 300% overnight?

[RationalHusker]

Those that feel this way makes me wonder if they would still feel the same if they didn't have any ammo and felt they needed to supply themselves at these prices.  Would they feel this way if the cost of toilet paper, electricity, or fuel went up 300% overnight?

The short answer to your question is this:  I would feel like I should have been better prepared and would be upset that I allowed myself to be in a situation that made me dependent on somebody else's cheap supply.  I'm not criticizing, that's my honest answer and it is how I feel when I am in that situation.  It happens to all of us on some level and some time(s).  I'm probably one of the least efficient, least advanced preppers that posts here frequently.  Would I like to increase my ammo supply right now?  Sure.  But do I have enough to feel comfortable until things normalize a bit.  Yes.  Same applies to toilet paper, fuel, or anything else. 

Gouging certainly happens.  But gouging is charging more when there is no lack of supply, only a perceived lack of supply or speculation that supply may dwindle.  But when you go to a retailer and can see that they have no .22 LR in stock, then it is logical for prices to be high.  I'm not sure what solution people upset about price hikes would propose?  Gov't price controls?  If there is a cheaper source, then vote with your wallet.  If there is not a cheaper source, then there is a reason for the price hike.

[raveneye]

I just watched 24 cases of 1000 rounds of 9mm FMJ disappear in the matter of minutes at $419 per case.  By comparison, a local ranges are charging $25 per box of 50 and strictly limiting sales to only range use to keep it in stock.  In BA's defense, they are charging far less than what the market will bear.  The only thing that says in inventory is a small selection of higher price stuff, giving the illusion that he is charging that much for everything.

[cohutt]

[rant]

This repeats some points already made.  But for christ sake.....  really???

If people didn't think it worth their while to pay $1 a round for federal 556 in quantity then it wouldn't sell and would eventually be marked to market at a lower price.

Nobody forces people to pay this, it is their choice.   Yes it is cheaper at walmart and the range at 20 or 50 rounds at a time,  but if you want bulk ammo when there is a severe shortage there isn't going to be a quantity discount, there will be a quantity premium. Duh.

It is going on 4 1/2 years now since the election of 2008; just when did it occur to the complainers that Obama might rattle his anti-gun saber?  February 2013?   It was no secret that he and his peers are severely anti gun; it isn't like Ted Nugent were elected president and then suddenly decided to go after assault weapons, catching everyone by surprise.
Shame on anyone who is mad at a vendor who has something to sell when few do.  This person should really be mad at themselves, for it is nobody's fault but their own.  If it is that important to a person, they would have (or is it should have?) purchased it at an earlier time at a better price.
To anyone who is against someone's right to charge as high as people consider it worth purchasing in a voluntary transaction, would you be as sympathetic where the same business is trying to sell something at a ridiculously low price just to get it off their shelves because they were the one who made the bad original decision to stock it?


[/rant]

[Blain]

Supply & Demand

This is one of the reasons we love the United States.

[nelson96]

This repeats some points already made.  But for christ sake.....  really???

If people didn't think it worth their while to pay $1 a round for federal 556 in quantity then it wouldn't sell and would eventually be marked to market at a lower price.

Nobody forces people to pay this, it is their choice.   Yes it is cheaper at walmart and the range at 20 or 50 rounds at a time,  but if you want bulk ammo when there is a severe shortage there isn't going to be a quantity discount, there will be a quantity premium. Duh.

It is going on 4 1/2 years now since the election of 2008; just when did it occur to the complainers that Obama might rattle his anti-gun saber?  February 2013?   It was no secret that he and his peers are severely anti gun; it isn't like Ted Nugent were elected president and then suddenly decided to go after assault weapons, catching everyone by surprise.
Shame on anyone who is mad at a vendor who has something to sell when few do.  This person should really be mad at themselves, for it is nobody's fault but their own.  If it is that important to a person, they would have (or is it should have?) purchased it at an earlier time at a better price.
To anyone who is against someone's right to charge as high as people consider it worth purchasing in a voluntary transaction, would you be as sympathetic where the same business is trying to sell something at a ridiculously low price just to get it off their shelves because they were the one who made the bad original decision to stock it?

We have an antitrust law in the United States to deal with monopolies and collusion for protection against gouging like this (I do realize I am generalizing and there are probably no laws actually being broken here, I hope) and you call this free market capitalism and simple supply & demand? . . .  I think simple supply & demand went out the door a couple hundred percent mark-up ago.

Small Example:
A manufacturer typically sets a "retail price" for an item. . .  Magpul decided not to increase there price on mag's but simply to increase their production.  When they entered the market their Distributors did mark them up much higher than retail and are making much higher margins than that of the manufacturer who also did all the R&D to bring them to market in the first place.  The Distributor did nothing more than to have his 'open' sign on.

While we're at it lets vote for bigger government and less competition. . . .  heading that way anyway.

Thank goodness I'm not having to pay these prices, I did foresee the problem.  But I don't want this to be the new norm (or even close) if current buyers set the standard for future pricing and accepted profit.

It's sad that it seems we gun advocates can't even get on the same page.  It's no wonder we have cheats, scoundrels, and imbeciles running our Country.

.

[cohutt]

I disagree.

There are thousands of ammunition dealers to do business with; BA has no monopoly of any sort.  They happen to have a high demand commodity in stock and offered at what they consider to be a fair market price.  If it doesn't sell at this price then it will turn out they are wrong.  If it does sell, then they were right. If it sells out quickly maybe they were wrong and this price was too low. 


If this is so out of line with the lack of supply and panic level demand then nobody would notice and bother to post about it.  They'd just skip it and buy it from the next guy at the more favorable price and not think twice. 

But as it stands, it seems that this is the market price and not out of line, and this is what is bothering people. 

Ammunition manufacturing isn't something that can ramp with a wave of a magic wand up when the industry is already going full bore. The capital outlay and equipment needed isn't cheap or instant.  If is wasn't then we'd not be having this conversation right now.  Perhaps MagPul had the capacity to increase production, so good for them.

Don't buy generators after a tornado or hurricane, you'll be mad if you can't find one and even madder if you can due to the price it will demand.   Same here.  The time to buy is a few months ago or a few months from now.   If one feels like they have to buy now then pay the price and know that the price paid is the price deserved.

Me buying ammo when cheap and not in particularly high demand and passing on BA's offer above is no different than me buying 50 lbs of peppers in september for $10 at the farmers market and then refusing to pay $4 for a single pepper at the grocery store in February.  Why aren't we raising hell about $4.00 peppers in February?

And yes like you, my ammo and semi auto rifle needs were met during normal market conditions over time.  This too shall pass.

[nelson96]

Collusion then?

[cohutt]

Collusion then?

I dunno.... my take is doubtful to any measurable or accountable degree.
You know "sometimes a cigar is just a cigar. "

What is, is.  This will pass.

There isn't always a bogeyman to lay "the blame" on nor should think that there is even always "a" reason for a lot of things

[raveneye]

If you really believe that ammo prices are too high right now, then dig into your safe, pull out some from your stash, head to the nearest gun show, and walk around with a sign on your back that says Ammo For Sale, listing whatever price you think is far.  (I know people doing this exactly this with ammo they have had for a while).  If you won't or can't supply ammo at your "fair price," then don't expect others to do so just because you think they should.

Something else to keep in mind with BA is that they are a nationwide dealer, and their demand will reflect the highest demand location in the country (at least where they are allowed to ship to).  For example, if 223 ammo is abundant in Iowa and can be found for 50 cents a round, but it is sparse in Texas and cannot be found for any less that $1.20 a round, then people in Texas are likely to clean them out anything listed for less than that.  From the perspective of Iowa, the prices look outrageous because the cheapest thing they have is twice the price of what can be found at local retailers.

[iam4liberty]

Well I have been talking to some of the people in the business and they are very worried about keeping their doors open.  The increase sales were great in the short term because they sold a lot of inventory.  But now they face the situation where they have continued relatively fixed costs (buildings, payrolls, etc) but reduced sales because of the shortages.  So the choice they have is to pocket the money they have already made and close down or try to keep the doors open by raising prices (and thus margins) on the limited supplies they have.  The small guys are really squeezed simply because they have access to fewer distributors and don't have the clout to get high on the priority lists with the manufacturers directly.  Also, because all the sales came at one time and they can't buy replacement inventory, they are facing even bigger tax payments in the short term.

Similarly, I know a former coin dealer who had $500K in inventory turn into over $2 million over a few years with the ramp up in precious metals.  He chose to pocket the gains and close the shop.  I know, I know what a horrible problem to have.  But he LOVED his business.

Another issue one of the smaller dealers mentioned is that he was forced to place orders with several distributors because he wasn't sure which would have inventory sooner.  However, he can only cancel a portion of the remaining orders as soon as he gets one in.  So if things calm down, he may end up with too much inventory.  And on Gun Talk a week or so back they were talking about how these "phantom" orders were driving the manufacturers crazy as they can't gauge what the true demand is.  So they may be caught running lines overtime at increased expense and end up with product sitting in warehouses.

I guess the moral of the story is that there is a cloud with every silver lining...

[nelson96]

I guess we'll have to agree to disagree on the fair market pricing??

As to businesses having to close due to shortages, well, it was probably imminent.  It's a testament to most anything, diversity is king.  You put too many eggs in to too few of baskets and/or you have too little money in the coffers then you can't make it through a rough patch.  That would suck to be one of them.  I know I sound like I don't care, but I do.

[nimzy88]

Collusion then?

Not that I have a problem with the free market and even flipping ammo but interesting post from Arfcom

"This document proves that Luckygunner.com is also know as below companies:
http://www.wallsofthecity.net/files/LuckygunnerLLCTennSOS.pdf

Ammo.net
BulkAmmo.com
AmmoForSale.com
GUNSFORSALE.COM
Military Ballistics Industries
LuckySurvival.com
LUCKYGUNNER.COM'

I have bought from bulkammo before and had a good experience.

[endurance]

I was talking with a firearms instructor who's well connected in the industry and he was saying that the problem right now is managing the supply of components they need to make ammo.  As a manufacturer of new ammo, they need to go outside for their brass to get their company name stamped into the brass, they're dependent on an outside manufacturer for primers and powder, and essentially all they control is the bullets and the assembly of the components.  With that, right now they're competing just like the rest of us, but on a much larger scale to while trying to acquire the components they normally work with to maintain consistent quality.  I can't imagine any of us who's used to a box of Brand X ammo, which used to work great in my Glock and finding that it runs dirty, is smokey, or doesn't cycle like it used to.  They can't afford to experiment with alternate powders and primers and thus, they're dependent on the rising prices everyone else is paying and forced to pass that along to their customers.

There's no easy answer to this situation.  Primers and powders will always be the weak links in the supply chain.  Knowing that, there's lessons to be learned here when things eventually do loosen up. 

I remember in 2008-2009 thinking the shortages would never end and when they did, no one would need to buy ammo for the next 30 years.  That demand did drop off, but we're here once again. 

[zanedclark@att.net]

EN +1
z

[nelson96]

I was talking with a firearms instructor who's well connected in the industry and he was saying that the problem right now is managing the supply of components they need to make ammo.  As a manufacturer of new ammo, they need to go outside for their brass to get their company name stamped into the brass, they're dependent on an outside manufacturer for primers and powder, and essentially all they control is the bullets and the assembly of the components.  With that, right now they're competing just like the rest of us, but on a much larger scale to while trying to acquire the components they normally work with to maintain consistent quality.  I can't imagine any of us who's used to a box of Brand X ammo, which used to work great in my Glock and finding that it runs dirty, is smokey, or doesn't cycle like it used to.  They can't afford to experiment with alternate powders and primers and thus, they're dependent on the rising prices everyone else is paying and forced to pass that along to their customers.

There's no easy answer to this situation.  Primers and powders will always be the weak links in the supply chain.  Knowing that, there's lessons to be learned here when things eventually do loosen up. 

I remember in 2008-2009 thinking the shortages would never end and when they did, no one would need to buy ammo for the next 30 years.  That demand did drop off, but we're here once again.

As an employee who works for a manufacturer, I know that contracts are signed and forecasts are given to protect both the supply chain needs and the control of costs on components to build products that are not made in house.  There are often temporary stipulations within those contracts for times like these that can increase costs and supply within the contract period, but I find it difficult to believe (impossible in fact) that the current impact has resulted in such high margin increases for the manufacturer.  30-40% increases would be understandable, but not 300% or more . . .  Certainly not with the major brand name manufacturers and certainly not with the mil surp that is sold which has been warehoused somewhere for months or years.

It is my belief that these extreme increases stem from wholesalers that sell to our local retailers and/or the local retailers themselves.  Right or wrong, I think that's where the increases are coming from.  My argument stems from the fact that the manufacturer of the product (ammo, magazines, or firearms) is making far less profit than their Distributors.  This alone isn't fair to them or the consumer, given the fact that they bear all the R&D and manufacturing costs to bring a product to market.  With the advent and popularity of purchasing goods on websites, the Distributors are going to shoot themselves in the foot if the manufacturers get fed up with what is going on.  if the Distributors don't expand now on providing a sustainable service to their customers (other than ammo and magazines) they will go by the wayside at some point.

[endurance]

As an employee who works for a manufacturer, I know that contracts are signed and forecasts are given to protect both the supply chain needs and the control of costs on components to build products that are not made in house.  There are often temporary stipulations within those contracts for times like these that can increase costs and supply within the contract period, but I find it difficult to believe (impossible in fact) that the current impact has resulted in such high margin increases for the manufacturer.  30-40% increases would be understandable, but not 300% or more . . .  Certainly not with the major brand name manufacturers and certainly not with the mil surp that is sold which has been warehoused somewhere for months or years.

It is my belief that these extreme increases stem from wholesalers that sell to our local retailers and/or the local retailers themselves.  Right or wrong, I think that's where the increases are coming from.  My argument stems from the fact that the manufacturer of the product (ammo, magazines, or firearms) is making far less profit than their Distributors.  This alone isn't fair to them or the consumer, given the fact that they bear all the R&D and manufacturing costs to bring a product to market.  With the advent and popularity of purchasing goods on websites, the Distributors are going to shoot themselves in the foot if the manufacturers get fed up with what is going on.  if the Distributors don't expand now on providing a sustainable service to their customers (other than ammo and magazines) they will go by the wayside at some point.

I'm not arguing with you that there's some profiteering, but this is a company that sells at least some of its products directly to the public.  It's much closer to a 30% increase on their site, but they're a premium manufacturer, so their stuff has never been cheap anyway.  I figure on the retail side, if a manufacturer is charging its distributors 30% more, the distributor wil tack on another 20-30% and the dealer will tack on another 20-30% and now you're talking about ammo costing twice as much.

That said, one of my favorite stores in Denver is charging $300 for a case of new ball 9mm that was going for $260 six months ago.  Some folks have done a dramatically better job of managing this mess than others and I want to say they're earning loyalty in the process.  However, in 2010 or early 2011 I bought 1,000 rounds from an internet seller for $165/1,000.  That same source is selling the same stuff (reloads) for $500/1,000 today, which I'm sure is at least $250-300 in pure profit vs. increased costs.  The problem is that if a year from now my local store is selling it for $260 again and my internet seller is back to $165, am I really going to spend an extra $88 ($25 for shipping vs. $18 for sales tax) to support the guys doing the right thing?  Human nature is human nature.  I want to be noble and reward the good guys, but in the end, I want to save money where I can, too.

[nelson96]

I'm not arguing with you that there's some profiteering, but this is a company that sells at least some of its products directly to the public.  It's much closer to a 30% increase on their site, but they're a premium manufacturer, so their stuff has never been cheap anyway.  I figure on the retail side, if a manufacturer is charging its distributors 30% more, the distributor wil tack on another 20-30% and the dealer will tack on another 20-30% and now you're talking about ammo costing twice as much.

I was referring to the general increases we are seeing abroad.

In my experience, wholesalers (distributors) typically only mark their products up 5-15% depending on who they sell to (it's the way it's supposed to work anyway).  Selling to wholesalers is a strategy provided by manufacturers to offer the retail businesses, that can't afford to buy direct, a way to compete in their markets.  These small retailers will often still find themselves at a disadvantage against the big box stores, but they should be providing a niche service which the big box stores do poorly to insure their place in the market. . .

In the end, if manufacturers are marking their product up an extra 30% to deal with current demand, the wholesalers maintain their normal mark-up, and the retail stores maintain their normal mark-up; we would see only a 30% mark-up at the consumer level.

.