Gross Margin on Ammo sales

[Kodemonkey]

I've got a question for you FFLs out there, what is typical gross margin on your ammo that you sell? Are you keystone pricing it or is it 20-30%

Reason I ask is I am an importer, and I was sitting down with my CEO and we were wondering what it would take to import from Korea PMC ammo.

We are not even at Business Plan stage yet, but it got me thinking. Just wondering what kind of margins gun stores typically look for in a profit margin.

[paul0660]

make this a poll with some representative percentages and you might get some answers. Were I a retailer, I wouldn't go public with MY number.

[trob]

I think its in the 15-25% area. quantity is a big factor though

[Kodemonkey]

Okay, added poll (set anonymous)

Just trying to get a rough idea. I wasn't sure if the profit is being made at the Wholesaler level and the Retailers are doing it as more of a loss leader to get people in the door to look at the other stuff in the store, or if it really was profitable.

We were thinking of an "ammo only" store that didn't sell firearms. Just cleaning kits/ accessories and ammo. Since the new ammo laws are going to be in effect, there might be a market for it.

Much more to look into, but I just don't see gun store owners making the big bucks. It's got to be profitable.

[Armory XT]

I noticed that Cheaper Than Dirt sells a specific box of ammo for $ 4.69 and Big 5 sells it for $ 9.69.

[trob]

I noticed that Cheaper Than Dirt sells a specific box of ammo for $ 4.69 and Big 5 sells it for $ 9.69.

Big 5 cannot be included in "normal profit margin". They rely solely on their sales to sell anything. They mark the prices super high and rely on their promo's to make the sale prices look incredible.

"Here's some $127.99 running shoes from Nike....on sale this week for $24.99"

[damndave]

make this a poll with some representative percentages and you might get some answers. Were I a retailer, I wouldn't go public with MY number.

+1.... But I can tell you, it isn't very much.

[Rob454]

I woudl say 10% woudl be average maybe 15-20 if you buy some quantity. But say you spend 100 k on a bunch of ammo and make 10% thats not bad. Considering you can sell it fast and not sit on it.

[HotRails]

Well really the question is what kind of margin can you make and still be competitive with internet wholesalers? Small shops just can't do the volume to afford that kind of markdown. If you'll sell to california that will at least be a plus.

[Sunday]

It depends on how much they want to make . I have a friend who was part owner in a gun shop [sold out his share in 2007] . They marked up the stuff no more than 30% Some guns less and if you ordered a gun and paid in full at time of order the markup would be 10% of cost which is really fair and they were busy and had happy loyal customers. I looked at the invoices when I played employee for the day.

[Kodemonkey]

Well really the question is what kind of margin can you make and still be competitive with internet wholesalers? Small shops just can't do the volume to afford that kind of markdown. If you'll sell to california that will at least be a plus.

Yes, but the game will change in feb 2011 and that competition will be outlawed. So, we expect the prices to rise considerably and someone that could do high volume and discount heavily will probably do well. Just thinking out loud for now. Maybe even a mobile business that frequents IDPA comps and negotiates a commission to the range.

[Kodemonkey]

And before I get villanized, my goal is to offer better pricing than the local gunstore but I know that I won't compete with Walmart pricing. However, Walmart might be out of the picture too. We would sell at bulk sizes only, and if we can get better pricing on exclusivity with one brand we could pass that down to the consumer. I'm a shooter too, and I just for see that the prices are going to go nuts for awhile.

[fishhoppa]

Well really the question is what kind of margin can you make and still be competitive with internet wholesalers? Small shops just can't do the volume to afford that kind of markdown. If you'll sell to california that will at least be a plus.

Here are the prices of what I paid for s&b ammo. I started out paying though the nose and slowly but surely discovered better prices elsewhere. The below spread should give some indication of the margins for this brand of ammo - granted it doesn't indicate how much each seller's wholesale costs.


S&B FMJ .45, 230gr / 50rd box
Local gunshop #1: $29.99 plus tax
Local gunshop #2: $24.99 plus tax
Online retailer #1: $18.99 plus shipping
Online retailer #2: $17.50 (each if 10+ boxes) plus shipping


The spread is quite substantial between each of these retailers. I'm all for supporting local gunshops, but not at 40%+ spread over the online retailers -maybe 20% difference, but definitely not a 40%+ difference. Big 5 prices are ridiculous and the Walmarts near the SF bay area do not carry ammo.

[edward]

And before I get villanized, my goal is to offer better pricing than the local gunstore but I know that I won't compete with Walmart pricing. However, Walmart might be out of the picture too. We would sell at bulk sizes only, and if we can get better pricing on exclusivity with one brand we could pass that down to the consumer. I'm a shooter too, and I just for see that the prices are going to go nuts for awhile.

I like your business plan.
Suggestion: PMC is good, have no problems with them. But have you looked into Federal or PRVI Partizan?
Are you going to shop around with the other bottom/mid-tier bulk ammo retailers to see who gives you the best pricing points, or are you pretty much set on PMC?

[Kodemonkey]

Not set on a particular brand. We just import from Asia on a weekly basis and PMC is in Korea. Again, just trying to do a little research first.