Discussion with FFL family member

[nanney1]

Extended family member, see only once or twice per year. He and his son dabble in various items, from flea market stuff, to collectibles, to vehicles, and firearms. They do sale at some local gun shows.

Basically, they want to get rid of all of their handguns, and only deal in collectible long rifles.They can't compete with larger vendors on price for new handguns.

Said that the big guys can get a big line of credit on an order of multiple, popular handguns that they can sale at the discounted price that they paid for the item. But because of the large volume orders, they get free ones as well. If they sell all at the wholesale price, they make 100% profit on the one(s) they received free.

He said the small guys like him are paying more for the item than the large guys are selling for. He said that most of the small vendors like himself are selling for $20 profit, sometimes as low as $10.

It was an interesting discussion. Said the greatest volume of what he does in firearms are $20 transfers.

 

[jimbob86]

It was an interesting discussion. Said the greatest volume of what he does in firearms are $20 transfers.

That's a niche to be filled...... adapt. Customer Service is where it's at.....

 

[Carmike]

I have a friend who owned a gun shop but no longer does...He said he also saw guns advertised for less than he could even buy them for. Just couldn't make it work, so he closed up shop.

 

[Aguila Blanca]

I have a friend who owned a gun shop but no longer does...He said he also saw guns advertised for less than he could even buy them for. Just couldn't make it work, so he closed up shop.

I know a couple of people like that.

 

[shootniron]

This applies to almost everything, not just guns.

 

[T. O'Heir]

"...the big guys can get a big line of credit..." They get better credit terms your uncle/cousin/nephew likely don't get at all.
Suspect the 'dabbling' part is a lot of their issue. There's little to no money at all in being a gun show dealer.
"...only deal in collectible long rifles..." There's not much money to be made in collector stuff either. And you really have to know the market and the firearms. As in not all M1 Rifles, for example, are collector pieces. And no rebuilt "correct" Carbine is either.

 

[Spats McGee]

Said that the big guys can get a big line of credit on an order of multiple, popular handguns that they can sale at the discounted price that they paid for the item. But because of the large volume orders, they get free ones as well. If they sell all at the wholesale price, they make 100% profit on the one(s) they received free.

I don't know about free guns, but I have no doubt that large retailers buying in bulk get better prices than small operations buying in single digits. When the manufacturer gets a large, guaranteed sale, the price per unit goes down. That's true in every industry, AFAIK.

 

[Bartholomew Roberts]

Heck, it has been that way since 1990 at least. The FFL I used to work for couldn’t even buy from other distributors at the same price that Fred’s Outdoor America was retailing. That’s how he got started building custom AR15s from Nesard parts kits. I think he eventually ended up just buying from Fred’s who gave him an additional discount as an FFL.

As a small FFL, you really need a niche to service.

 

[zukiphile]

He said the small guys like him are paying more for the item than the large guys are selling for. He said that most of the small vendors like himself are selling for $20 profit, sometimes as low as $10.

It was an interesting discussion. Said the greatest volume of what he does in firearms are $20 transfers.

There is a correct way to approach that information, and a bad way. The bad way is to regard customers who want to buy what you sell as thieves and enemies. I've seen some FFLs with profoundly sour attitudes about this.

The ones who I've seen prosper don't regard selling guns as their core business. They sell range time and training and a bit of fellowship, things people can't get at Walmart or online. They may be happy to sell you a gun, but that isn't what pays their salaries and utilities.

 

[nanney1]

I don't know how much the gun sales and transfers compare to the other items they deal in. Several years back, they were the first to get shipments of the Duck Dynasty t-shirts when the show became a hit. And they sold a ton of them at the flea markets.

 

[johnwilliamson062]

I once tried to get an FFL to buy from a big store and resell to me at slightly above what I would pay with transfer if I ordered it. He was insulted and said he wouldn't support his competitor like that. He is out of business and I am still buying guns.

I know a drive-thru owner who bought a huge covered trailer. So he could buy pop at Wal-Mart because they sell it cheaper than his distributor.

 

[StrangeBird1911]

And I've got a buddy who is accountant at a local lumberyard. He can get plywood at his employer's cost, but that's more expensive than going to Home Depot.

 

[armoredman]

I worked at a gun shop 16 years ago, and what we made on selling new guns wouldn't have kept the lights on. Accessories was where the money was, and the markup on targets, cleaning supplies, etc., was sometimes over 100%. This was without gouging, we remained competitive. Holsters, ammo, other consumables were the ones that paid the bills.

 

[Joe-ker]

Trouble now is with Amazon all the accessory type stuff is available without ever leaving home. I'll admit I like on line shopping and hate what it does to brick and mortar stores. Was at LGS other day----didn't waste much time on accessories knowing I could shop around at home. Good used gun selection at decent price points ( not like cabelas and others) and knowledge and service is all guns shops have to hang their hat on anymore unfortunately.

 

[Ricklin]

Things are tough all over

The above thread does not have to be about guns. It's pretty much the same in every aspect of business today. The little guy can survive and actually prosper IF they find the appropriate niche.

Plus it must be the right niche. As the corporate monster feeds it will start devouring niche business's as well.

Corporate interests will start to fill the larger niches as shareholders demand more.

 

[FITASC]

I don't know about free guns, but I have no doubt that large retailers buying in bulk get better prices than small operations buying in single digits. When the manufacturer gets a large, guaranteed sale, the price per unit goes down. That's true in every industry, AFAIK.

What also is in play is that some manufacturers want you to buy a complete line, even their "dogs" to get the best pricing as well as the hot "can't keep it stock" new models. Browning for one, when my friend had a store, wanted him to buy in $25,000 increments as a minimum if he wanted the best pricing, even though it would have meant taking some guns he really didn't want to stock. If you're small and buying 1-2 at a time, you will never compete with the big boys on pricing so you need to make it up with service, accessories, etc.

 

[carguychris]

Trouble now is with Amazon all the accessory type stuff is available without ever leaving home.

You can't try on a holster over the Internet.

Another niche that hasn't been brought up is reloading supplies. The effective markup from the hazmat shipping fees is substantial when you're not buying in bulk, which strongly discourages dabblers and other low-volume handloaders from mail-ordering powder and primers.

 

[5whiskey]

Trouble now is with Amazon all the accessory type stuff is available without ever leaving home. I'll admit I like on line shopping and hate what it does to brick and mortar stores. Was at LGS other day----didn't waste much time on accessories knowing I could shop around at home. Good used gun selection at decent price points ( not like cabelas and others) and knowledge and service is all guns shops have to hang their hat on anymore unfortunately.

This is very true and probably explains a lot. It's because of this that I *TRY* to give some business to the LGS when I can on accessories if the price is somewhat competitive. But I hardly ever buy anything anyway, so I'm just a thimble of water in a swimming pool.

Another niche that hasn't been brought up is reloading supplies. The effective markup from the hazmat shipping fees is substantial when you're not buying in bulk, which strongly discourages dabblers and other low-volume handloaders from mail-ordering powder and primers.

I've tried to sell this idea to 3 LGS close to me. They all tried selling reloading supplies, and the answer every time was "the stuff never moves." I tried to explain that they only have 7 or 8 types of powders (with half being rarely used stuff like lever revolution or trail boss), common caliber Lee die sets, and primers sold 100 at a time (they wouldn't even sell by the brick, preferred to charge $4.50 per 100), and that no one who is an avid reloader will travel to their store or purchase any of that at the price they're asking for it. Those items are really for the guy who dabbles in reloading, or just got started. If they were a reloading mecca with prices on par with Cabelas, however, they would get enough of "travel-to" business from high volume reloaders to support it. Reloading supplies is not something you can have a couple of shelves devoted to with the most common items in stock at a huge markup. 1 LGS understands my point but they are the smallest with limited floor space and do not want to go in that direction. I understand their perspective. The other 2? They have enough floor space wasted to have a VERY nice reloading section, but they don't believe it will sell so they don't want to devote the time to it. Few people, even gun people, understand reloaders IMO. A very good selection will draw people from 3 counties over for powder and primers if they can be in the ball park with big box store prices (they would have to undercut Bass Pro though, They want $27.00 for a 14 oz can of 700x ).

Lastly, I suspect this is tough time to be an FFL business with the current gun glut. There have been good years. Everyone remembers evil black rifles flying off the shelves for above MSRP in 2008/2009 and again in 2012. Prices stayed up on ammo and certain accessories for a good while. Many LGS owners made a good bit of money back then, when they could get any inventory in. So... the business may be a bit of feast or famine like so many others.

 

[buck460XVR]

I don't know how much the gun sales and transfers compare to the other items they deal in. Several years back, they were the first to get shipments of the Duck Dynasty t-shirts when the show became a hit. And they sold a ton of them at the flea markets.

Having a table at a flea market is a lot different than a brick and mortar store. Profit on new guns is known to be little or none since very few folks are willing to pay full MSRP. Without a retail store, I would think that transfers would be about all one could reasonably do outta their home any more. Sounds like your relative is a proverbial "Jack of all Trades and Master of None", and a typical Flea Market vendor that has a little bit of everything and hits or misses on what the current customer base is looking for. Collectable long rifles are probably what folks going to a flea market looking for guns are expecting. Folks looking for a new revolver generally don't even consider that venue.