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Last Updated: Aug 28, 2009 - 10:45:21 AM |
In at least one instance in today's almost manic demand for black rifles, it seems the answer is an unqualified "yes". More than one dealer is complaining that one distributor is not only raising prices to dealers, they're selling that same inventory direct to consumers - for the same price.
What's wrong with that picture?
Plenty, although there's no restriction on a distributor selling to individuals as long as the transaction is completed through a licensed dealer. As one former dealer told me, "it's always been up to the dealer to make his own money, a distributor can sell to anyone they please as long as the transaction is completed through an FFL." But, he confided, he wouldn't bet on the distributor winning any friends in the dealer ranks.
Some call it an example of supply and demand; others say it's no different than the "entrepreneurs" who snapped up all the available plywood in their areas and trucked it to the Gulf Coast following Hurricane Katrina. There, they sold that plywood to disaster victims - at astronomical markups. It's the same business practice some hoteliers use when they jack up their room rates whenever an opportunity presents itself.
It's not applications of the golden rule, but in very few cases is it illegal.
With the help of retailers, I priced a Smith & Wesson M&P 15 X rifle through three distributors. Although none of the distributors had the rifle in stock, their respective prices varied by less than twenty dollars. According to those cooperating dealers, that price variance is nothing out of the ordinary.
The "questionable" distributor, however, had quoted that M&P Model rifle to one of the cooperating dealers a price more than forty percent higher. Similar Colt models were also offered - at an even higher premium.
I called the distributor as an individual, and quickly was told there were absolutely none of those guns available and there hadn't been for "days." The salesperson declined to quote a price, however, saying "the market conditions made prices too-hard to quote."
Manufacturers I spoke with, however, told a different story. Prices, they say, haven't varied, despite the unprecedented demand.
On the surface, the practice might seem dubious, but some retailers say it is actually far worse than simple profiteering, at least if you plan on staying in the business..
For Mark Whitlock, owner of Mark's Outdoor Sports in Vestavia Hills, Alabama, has been in firearms and outdoor retailing for twenty-eight years, growing into one of the independent retailers recognized as being among the best of the best.
To Whitlock, the price boosting has the potential to make everyone in the gun business look bad. But he says he understands from his own experience why some dealers might pay prices he now calls "outrageous".
"It's tough for small dealers to get high-demand guns in good times," he explains, "today, they don't have much chance of getting ARs or high-capacity pistols. If they buy them from a distributor charging retail price or better, they're paying a huge premium. And they can't afford to sell the gun at no profit, so they've got put some money on top of that price for themselves. Their customer winds up overpaying, a bunch, for the gun."
"One day that customer might want to trade or sell that gun," Whitlock explained, "if he walks into my store and asks for a price on his gun, he's going to think I'm trying to rip him off. Then, he'll see that gun or one like it - brand new - for several hundred dollars less, and he's going to think the first guy ripped him off. He'll go back there and really not be happy. When the dealer explains that he and only made fifty bucks or whatever, the manufacturer winds up looking like the bad guy, even though they had nothing to do with it."
Paul Pluff of Smith & Wesson agrees. "People are going to think our prices have skyrocketed," he told me, "they're going to think we're price gouging."
"That's just not the case," he said, "we haven't initiated any price increases." Point of fact, Smith & Wesson continues to offer rebates on many of their products, including high capacity pistols and rifles.
Pluff declined to quote a Smith & Wesson distributor price, but described the price quoted by the fourth distributor as "retail - plus."
With the exceptions of Whitlock and Pluff, the other dealers and industry figures I spoke with asked that their names not be used. The reasoning? They weren't looking to burn bridges with anyone in the industry, whether they approved of their business practices or not.
As demand for these firearms continue to outpace manufacturing capacity, some consumers seem to be developing a sense of urgency - if not outright panic- to buy them before any governmental actions could be taken to reinstitute the now-expired "assault weapons" ban. With growing murmurs from around the country regarding other potential threats to ammunition from bullet serialization to bans on lead, that consumer unrest is unlikely to abate anytime soon.
The choice of manufacturers, distributors and retailers is to either rise to the challenge of meeting consumer need and creating the ongoing goodwill that will keep their brands - and businesses - viable, or taking a quick buck and risking the consequences.
--Jim Shepherd
http://www.shootingwire.com
http://www.theoutdoorwire.com
© Copyright 2008 by DOWN RANGE TV
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