Mark,
I have to respectfully disagree. I have been buying ammo and firearms in quantity for over 25 years as both a licensed dealer and private individual.
Kerry -- I appreciate all viewpoints, and you made some fine ones, especially given that you have about 15 more years experience in this field than I do. Thanks for the insights.
Some of those large retailers will sell what they receive at a fair markup but their costs end up being higher and their selling price reflects that higher cost. Some of the large retailers will resort to supply and demand pricing and let the market dictate what the final selling price will be. If people continue to pay the excessively high prices...there is no incentive to lower the price. If no one buys...the price comes down. If it doesn't..its because buyers remain willing to pay a premium for quick availability. If anyone needs to be held accountable for "price gouging"...it is those buyers who continue to pay exorbitant prices. Were they to stop doing so...prices would return to more reasonable levels.
Agree re: buyers driving up the prices. And the right for every retailer to charge what the market will bear. I do take some issue with the shortages coming mostly from the supply side (which in fairness you did not explicitly claim). It's definitely coming from both sides.
Here is the way I think about it: Even as recently as 2002, I could buy a box of 20 S&B 55gr FMJ for $4.49, or $225 per thousand. Then it crept up to $5.49, and $6.49 where is stayed through about early 2007. Much of this WAS driven by supply side, as I remember receiving the letters from the manufacturers about commodity price increases, increased military usage of ammo, and so forth. Note that it was NOT mainly driven by a big influx of new shooters.
The current run of Wolf costing $9.99/box at some retailers (wow!)... I have a hard time believing that all comes from increases in wholesale pricing, but I could be wrong. The intuition comes from places like AIM selling it for $5-6/box -- I forget the actual price they sold them on Monday. Hence, the places selling them for $10 are doing exactly as you describe, setting prices for buyers willing to pay up for immediacy.
I'm not completely innocent here. I had three LMT uppers at one point. I now have two, as the other I sold off on Gunbroker. Wanted to see what I could get for my $475 upper plus $130 BCG. Turns out my $605 turned into $899 in 3 days. I eased my conscience by listing it at 1 penny as a starting price.
As for LPKs, barrels, etc -- maybe we split the difference and call it both demand/supply side constraints? I think Rock River wasn't struggling to keep up with demand until the election and its results. So while they are indeed back-logged for up to a year on parts, it also stems from thousands of non-AR rifle owners flooding the market all at once and wanting to pick up a few "just in case". It brought in new demand that the industry was not prepared for. In many--and I'd venture to say, most--of these cases, these new owners have bought safe queens and will never shoot their rifles. I should know, I was one back during the first AWB, when I socked away a Daewoo and Colt that I never shot over the next ten years, until I sold them in 2004.
Back to LMT -- Bravo Company puts these uppers for sale every so often for $475, and they sell out in 15-30 minutes every time. But after every month, the secondary prices have been coming down. $900, $800, and now $625. What Bravo just said is that LMT will begin to ship 10-15X(!) normal shipping amounts starting June. Supply is indeed catching up, at least in some areas.
If I was an advisor to these companies, I'd be worried about expanding too much because of the risk of getting caught in legislation. In options trading, there is a strategy that makes a little money almost all the time, but once in a while you lose big -- the traders call it "picking up nickels in front of a steamroller". That's how I'd feel if I was an AR manufacturer. You can expand and fulfill the supply, but a hostile Congress can make all your hires and factories go silent in a single swoop, and much of the demand is (in my opinion) temporary in origin anyway.
Price gouging... is when you charge double for a product that a customer can easily buy from another source for half the cost....and where your wholesale cost of the product has not increased.
This is one point I'd disagree with, stating that price gouging is not applicable if the product is available "easily" from another source. I'd state that it happens when a shortage occurs due to natural disaster, unexpected demand, etc, and the suppliers of the product take advantage of the situation of the consumer NOT having any alternatives. Just like people looking for gasoline after Katrina can't drive to Houston for gas -- they may be forced to pay $20/gallon because there is no alternative. If no barrier exists to buying elsewhere easier, no money will go to the higher price -- money and capital is pretty efficient that way.
I do believe the middle ground is the truth in this argument. OMB gets 500,000 rounds of Winchester every month or so, and then fulfills its backorders at original prices. If wholesale prices had risen across the board, then they would be losing money. I must therefore assume that there is some combination of some retailers paying up for supply, some retailers having wholesale costs go up, some preferred retailers having original wholesale costs and taking advantage of pricing, and finally a small group that has original pricing and sells what they get in spasms when it arrives.
Interesting times we live in. I personally am calling this a bubble (I've seen more than my share) and also have the patience to wait things out.
