The gun feed posted a video from a guy exhorting us all to stop buying ammo online.
It’s a youtube video so I won’t embed it or link directly to it, but here’s the link to the post.
Basically, his contention is that online ammo sales are a scam and that price gouging is caused by it, and the reason brick and mortar stores don’t have ammo is because the online places are buying it all up. If we just stop buying online, shop at a local gun dealer and wait patiently if they don’t have what we need, we’ll all be fine.
He’s entitled to his opinion, even if he’s wrong.
First, I don’t know what online places he’s been dealing with, but if a place says it has ammo in stock, I order and it isn’t in the mail within a day or so, I’m never ordering from that place again. Personally, I’ve never had that experience. The only time I’ve had to wait more than a few days for something I ordered online to be shipped is when they told me up front that it was backordered. Most of the online retailers lately won’t even let you backorder ammo, they just say “not in stock”.
Secondly, “Price Gouging” is a good thing, not a bad thing. This is basic economics. If you’ve never read any of Thomas Sowell’s books, I recommend them highly.
Prices are a method of communication. When something is scarce, the price goes up because the market will support it (people will pay the price). This increases profits, which encourages investments in additional production.
High prices also discourage “panic buying”. Any store that offers ammo at prices that would have been considered reasonable before the shortage, will be sold out in a matter of minutes because of people buying as much as they can in fear that they won’t be able to find it later…a self-fulfilling prophecy. There was recently a story about an Academy Sports store in Florida that had announced on facebook it had a shipment of ammo coming in…they had people traveling hundreds of miles and camping out at the store the night before to try to buy some ammo.
Granted, stores can “ration” and limit purchases to a set amount, but even people who already have a good supply at home and just want to “top up” will buy the maximum amount allowed and the supply will quickly run out.
Prices are a more effective way of managing supply. If I have a good supply of ammo on hand that I paid pre-shortage prices for, I’m much less likely to buy more “just in case” if the price is three or four times higher than normal. If people who already have a good supply are taken out of the group of purchasers, the people who are left…the ones willing to pay the exorbitant price, are usually the people who actually “need” the ammo. It’s self-rationing and ensures that the most “needy” get what they need as long as they’re willing to pay the price.
Example: I already told the story of my search for ammo for the 6.8mm Special Purpose Cartridge (Remingt... More rifle I recently built. When I went to buy ammo for it, the only places I could find that had any in stock were charging upwards of $2.00 a round. I did end up buying some so I would at least have a little bit, but I only bought two boxes because the price was so high. If the price had been lower, I’d have likely bought a couple hundred rounds. Because I only bought two boxes, the other 8 I would have bought are still available for someone else.
That’s how the communication part of pricing works, but there’s another benefit to high prices as well, and this is why even brick and mortar stores also raise prices during shortages:
Stores typically have a supply of product on hand and when they reach a low level they order more. When a shortage such as this takes place, their sales volume initially goes up, and they make good profit while their supplies last, but then they sell out and sales stop. If they can get their resupply in a reasonable time and at a reasonable rate, no problem…the profit they made from the surge can hold them over.
But what if their resupply is slow or what they get doesn’t fully restock them? Sales slow to a trickle and it doesn’t take long before the cash reserves of the initial surge are gone. If they have nothing to sell, they can’t make any money. So…when they do get a resupply, and it’s smaller than usual, raising prices is the only way to make the revenue they need to stay in business.
Do you like having gun stores available from which to buy products? If so, then don’t complain about “price gouging”. In periods of short supply and high demand, sometimes the high prices they get from each sale is the only way they can keep the lights on.
The same goes for online merchants as well. If they don’t have any merchandise to sell, they can’t make any money, so when they do get limited stocks of merchandise, in order to keep paying the salaries of their employees and pay the bills, they have to make more from each sale. That’s just how it works.
It isn’t online merchants causing this shortage any more than it’s brick and mortar stores. The shortage is being caused by huge numbers of new gun owners trying to feed their new guns, and people uncertain about the future trying to get prepared for any eventuality. High prices are a signal that there is a scarcity of supply, and what it’s saying is “hey, maybe you don’t need 10 boxes of that ammo and can get by with only 2”. Yes, it’s unfair that some people are priced out of the market, but as my Dad used to tell me, “There’s nowhere on your birth certificate that you’re promised life will be fair”.
At any rate, I respectfully disagree with the guy in the video, whoever he is. Online sales are no less legitimate than buying from a gun store, rising prices in times of shortage is a natural and net positive effect of capitalism, not a scam, and online sellers are not causing the ammo shortage. In My Humble Opinion.