Where’s All The Ammo?

PART 2 | WHOLESALERS

It’s been over a year since ammunition began to fly off retail shelves across the country. The confluence of the COVID-19 pandemic, nationwide civil unrest and a turbulent presidential election created the perfect storm for the shooting sports industry. According to NSSF estimates, approximately 8.4 million people purchased a firearm for the first time in 2020, leading to historic ammunition sales and shortages. As we approach the midway point of 2021, the unprecedented surge in demand shows no sign of slowing.

Despite manufacturers ramping up their operations, ammunition remains in short supply in many places. Many questions surround the current state — and future — of the market. When will the ammunition supply catch up to the demand? How are manufacturers, distributors and retailers working together to optimize the supply chain? Will the market return to normal this year? Finally, what does the future hold for ammunition sales?

To help answer these questions and more, Shooting Industry spoke with Bryan Tucker, president/CEO of Davidson’s Inc.; Stefanie Zanders, president of Zanders Sporting Goods; and Eric Jensen, CEO of 2nd Amendment Wholesale. As the bridge between manufacturers and many retailers, these wholesale distributors provide a unique perspective on the ammunition market. Here are several of the insights they shared.

Has the supply of ammunition from manufacturers improved any in 2021?

Jensen: Aside from congestion leading to delays at the port in January, we have been fortunate enough to receive reliable shipments of ammunition from our suppliers in 2021. We also received consistent monthly shipments in 2020 and we’re seeing approximately the same amount of ammo this year compared to last year.

Zanders: Ammunition is still in short supply, but it has improved slightly from 2020. We continue to communicate and work with our manufacturers to make sure we’re doing everything we can to make things easier on them to expedite product.

Tucker: It’s about the same. I think there has definitely been improvement in some lines. I talk to manufacturers and they have some modest production numbers. I think they’re going to increase and we’re trying to get our fair share. That’s how we’re working with manufacturers in general to make sure we get our allocations. We allocate to our dealers and try to match up where we’ve gotten past support on ammunition purchases from dealers. Naturally, those are the guys we feel obligated to try to direct a sufficient amount of supplies out of what we receive. We’re starting to receive shipments from the Remington brand under Vista ownership. We’re grateful for the supply line resuming and we believe they’ll be able to produce ammunition at even higher levels than what Remington was doing before.

What do your ammunition inventory levels look like right now?

Zanders: Low to very low — as with all distributors I suspect. We continue to bring in a lot of ammunition every week, but most, if not all, is already allocated and sold.

Tucker: We really don’t have any inventory. We may have some in stock temporarily, but all incoming supplies are basically allocated to our dealers.

Other than this in-and-right-back-out ammunition, we basically have zero inventory. I say zero inventory, but I’m sure there are a few SKUs in African cartridges and that type of stuff. Demand has been so broad across centerfire, rimfire and shotshell ammunition, it is quite astonishing — so different than the previous ammunition spikes I’ve seen over my career. I really don’t see the pipeline filling up in 2021, given the breadth of demand and the breadth of inventory outages. It may take quite a while for the manufacturers to get around to making some of the ammunition calibers and bullet configurations with smaller overall demand. If you’re a .270 WSM shooter, you could be waiting quite some time for your favorite load to make it back to the shelves.

“I encourage my company, and certainly the manufacturers, to listen to the retailers because they’re going to see evidence of a slowdown first.”

Bryan Tucker, President/CEO Davidson’s Inc.

Jensen: We’re currently in-stock on all major calibers from our number-one ammo supplier, PMC. Multiple pallets of 9mm FMJ, 5.56 NATO, .308 Win., and 7.62×39 brass-cased are all in stock and ready to ship. We also have a respectable amount and assortment of WOLF steel case 7.62×39, .223 Remington and .308 Win. in-stock at this time. Of course, due to dealer demand greatly exceeding supply, we have all of the aforementioned ammo “allocated,” which means dealers must spend Allocation Points to unlock allocated items for purchase.

What are you hearing from ammunition manufacturers in regards to production and their ability to fulfill orders? Are they keeping you informed about their current production?

Zanders: We continue to work, and communicate with, our manufacturers on a regular basis. They have been very open and honest with us as we have with them. We have heard many of the challenges they are facing (demand, raw materials, COVID closures, etc.), but all roads lead back to COVID and how it has affected the supply chain globally.

Tucker: In generalities. They’re saying they’re concentrating, naturally, on high-volume items. Now, some of them are purposely trying to get back around to some of the lower-demand SKUs, but the shortage is just so broad. The communication is pretty good. We’re pleased with how we’re being treated. We could use two or three times more than we’re getting in this particular market. However, we realize labor, component supplies and logistics make it virtually impossible for a manufacturer to increase production 100–200%. We’re just hoping to get our fair share as it comes through.

How are manufacturers working with wholesale distributors to optimize the supply chain?

Jensen: Early this year, our ammo manufacturers requested we issue quarterly orders. We did so, as this ensured we’d receive consistent shipments throughout 2021 and the scheduled shipments help the manufacturers plan production. Future order planning seems like it will be expanded even further, as our main ammo supplier recently mentioned they would request an estimate of our 2022 ammo needs in September of this year.

Tucker: They help us greatly by sharing with us what works most efficiently for them. We try to know what the pallet-size orders are. In the past, we may not be ordering 170-grain soft point .30-30 by the pallet, but maybe it’s feasible now. We’re making sure we submit POs that are truckload quantities and consolidating past small orders. Davidson’s, like everyone, would love to get close to filling our customer’s demand, however we also understand realities. Let’s say your plant is designed for 30% capacity in reserve. When the market hits and goes up 100% (or more) because of all those new shooters, it creates such a large discrepancy between supply and demand. They all have set goals to produce more ammo and we are hearing growth targets between 20–30% in 2021. However, it will be very difficult to achieve because many ammunition factories were already operating at capacity. The facilities had largely been optimized, so you just run into some realistic constraints. Also, while the finished ammunition customer is suffering from the tremendous shortages, ever worse off are reloaders. Components and primer supplies really suffer because there’s a big incentive for them to be put in finished ammo.

Conversely, what are you hearing from your customers?

Tucker: They’re just as amazed as I am about the surge. I was at a trap and skeet range the other day and the owner lamented how he was not able to get 20 GA bird shot or standard target loads.

Jensen: We’re hearing dealers are now able to find ammo here and there, however, the supply they’re able to procure is not as consistent and reliable as they would desire. The lack of a fair way to distribute ammo is one of the main reasons we launched our Allocation Points program. We wanted our dealers, both small and large, to at least have the opportunity to purchase ammo consistently. Dealers earn Allocation Points from us when buying everyday (non-allocated) items and reap the rewards by being able to cash in those points to unlock rare items, namely ammo, for purchase. Dealers appreciate this straightforward and transparent approach to the “allocation game” and every non-allocated item purchased from us gets them a measurable amount closer to an allocated item.

“Let’s say your plant is designed for 30% capacity in reserve. When the market hits and goes up 100% (or more) because of all those new shooters, it creates such a large discrepancy between supply and demand.”

Bryan Tucker, President/CEO Davidson’s Inc.

Zanders: Dealers are struggling, period! They can’t get product and when they can, they’ll take whatever they can get in whatever quantities. It makes it very difficult for supply forecasting and managing the expectations and retention of your customer base. It’s a tough way to do business.

Tucker: We don’t take back orders, so we’re not really making absolute promises. If a dealer can find that ammo at another distributor, buy it. You don’t hold off because it’s almost impossible to predict exactly when we’re going to get a particular offering from the manufacturer. Our communications are good, but they’re at more of an aggregate level. Certainly, prediction of SKU delivery is not something we’re receiving on a general basis. It’s subject to so much change in a time like this, it really wouldn’t be viable info. In the past, we signed up dealers to our Master Ammunition Dealer Program — which had some volume requirements to qualify. We’re funneling the goods to those dealers, the ones who bought ammunition principally from us in the past. Then secondary to them, it would be to the dealers who support us in general.

How have the events of 2016–2017 impacted your approach today? Are you worried about over-leveraging product/capital in case of a sudden drop-off in demand occurs (however unlikely) like the industry experienced in 2017 after President Trump’s surprise victory in the 2016 election?

Tucker: Is it a worry? Absolutely. Especially when you’re talking about ARs and that type of merchandise. At the tail of the Trump slump, like a lot of people, we got hung with too much inventory. We’re trying to manage for the inevitable backside that will follow this surge. Communicating is key. If a manufacturer told us exactly what they were going to be able to deliver in the next six months to us, we would probably actually increase our on-order status. Leaving large quantities on order for too long is what can be trouble, with the goods finally being delivered after demand has fallen. I encourage my company, and certainly the manufacturers, to listen to the retailers because they’re going to see evidence of a slowdown first.

Jensen: At this point, we believe if dealers receive an opportunity to buy ammo or other high-demand tactical firearms at a good price they’ll stock up. Dealers have had over a year of elevated sales and hopefully many of them decided to reinvest those profits into their business. Each dealer has seen what it’s like to try to run a business while being out of stock on 9mm ammo for most of a year, so if they come across an opportunity to buy a few years’ supply in one order they will likely do so as long as they have the cash and space. If there is a slowdown in the market, we don’t believe it will be a sudden drop-off in demand due to how many new firearm owners are out there for our dealers to sell products to.

“Dealers appreciate this straightforward and transparent approach to the ‘allocation game’ and every non-allocated item purchased from us gets them a measurable amount closer to an allocated item.”

Eric Jensen, CEO 2nd Amendment Wholesale

Zanders: There’s always the concern of being overleveraged and having the right balance. I’d like to say traditionally we would do this or do that, but what I’ve discovered over the course of the past year is there’s no “traditionally.” This incredible demand isn’t being driven from a particular set of events or proposed legislature. This is at a level we’ve never seen before and it is affecting every piece of the supply chain on a global scale. With that said, I don’t see this demand diminishing anytime soon and given the enormity of the situation, I feel and hope there will be a fair amount of indicators signaling a downturn.

What is your forecast for ammunition demand in 2021? Do you think consumer demand will remain as high as it’s been the past few months? Or do you think it will start to level out?

Tucker: I really think it’s going to stay pretty strong. Again, I’m talking aggregate because you could have fill-ins on calibers and that type of stuff and it’ll start filling in. It’ll take a while for the pipeline to really be full. As far as the forecast for myself and retailers in general, I think it will be pretty strong through 2021. I don’t think you’ll really see much of a slowdown.

Jensen: It’s clear we’ll continue to see a very strong demand for ammo from our dealers for the remainder of 2021. We expect consumer demand will remain high as well, with dealers being able to easily sell all of the ammo they can procure for the rest of this year.

When do you think the supply chain will begin to catch up to the demand?

Tucker: I don’t think the supply chain can catch up with the current demand. It will take a reduction in demand for things to return to normal. With the intense gun control talk of the administration and proposed taxes on ammunition, continued civil unrest, in my opinion, the market will not return to its “past normal” this year.

Jensen: It’s unlikely the supply chain will catch up to demand this year. It’s possible it could happen at some point in 2022; however, there’s no chance ammo prices will go back down to what they were previously due to how much money the ammunition manufacturers have spent in their attempts to meet the skyrocketing demand.

Editor’s Note: Additional insights, such as how COVID shutdowns impacted each of the three wholesalers interviewed here, is available in the online version of this article at shootingindustry.com.

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