Originally posted on https://bulkmunitions.com/will-walmarts-new-ammo-policy-hurt-profits/
With an ever-increasing pressure from, Walmart has decided to stop the sale of ammunition. For a while now, the retail giant has faced a tough position by reason of several high-profile mass shootings that have spurned the public to call for a ban.
While Walmart has relented to the anti-second amendment crowd before (they stopped handgun sales in the mid-1990s after the 1994 assault rifle ban and stopped selling AR-style rifles in 2015), they have never done so abruptly and has left the public with lingering questions.
Before we break down the impact of Walmart’s decision to discontinue selling ammunition lets look at the key moments that have lead to this choice.
In 2018, a horrific shooting in Marjory Stoneman Douglas High School in Florida caused Walmart (as well as Dicks) to raise the age for purchasing firearms up to 21 from its previous age of 18. New York Times did an informative piece on the controversy and reasoning surrounding these changes.
Fast forward to the recent shooting at its store in El Paso, Texas, the company has taken a hard step back and came to the conclusion to stop handgun and 223 Rem / 5.56mm ammunition sales altogether.
Once the supply they currently have in stock is sold, they will no longer be replenishing their inventory. Along with that, they have also requested that customers no longer openly carry firearms in their stores.
The U.S. commercial (non-military) ammunition market is estimated to around $2-billion dollar market in 2019. Of that market, Walmart is a fairly large player currently.
According to its own reporting, Walmart controls approximately twenty percent of market share. That means Walmart sells around $400 million in ammunition annually.
That might seem like a ton of money to you and I and that Walmart would severely hurt it’s bottom line by foolishly to stopping most ammunition sales. But the truth is, Walmart won’t really take a major hit in their profits.
Walmart released its 2019 annual report and proxy statement early this year which reflected a fiscal year with $6.63-billion in total profit.
Assuming Walmart makes a net margin of 10% on ammo (which would be high, compared to their other sales, but in line with the market average), that would mean current ammunition sales add about $40 million in profit to Walmart.
Since Walmart will still sell most rifle ammunition, they do expect to keep 30 50% of their current market share (6 9% of the market).
If that’s correct, Walmart will lose $20 30 million in annual profits from their recent ammo sale policy change.
Again, seems like a lot of money to most, but that’s really only 0.25 0.4% of Walmart’s profits.
Therefore, Walmart is making a big statement with little risk to its bottom dollar.
We at Bulkmunitions find the move to be overly bold and we’re curious to see the ripple effect of this decision and the one big question that arises from it all.
Where will customers go now?
Those in more rural communities where Walmart was a major distributor of not just ammo but most necessity will now face harder times acquiring ammunition. Where will the customer go now? We believe this void will be filled by the vast retailers of online ammunition.
Buying online has some distinct advantages over buying in-store.
For example, you can buy bulk ammo at a lower cost, and find a wider variety to chose from. Not to mention, you have the convenience of them delivering the ammo straight to your door instead of having to drive out to the store to get it.
The one downside that some people have highlighted is the additional cost of shipping that goes with buying online. However, with the competitive pricing of online retailers, even factoring the cost of shipping the average consumer will save on their purchases.
Buying bulk ammo online is a great choice for those in firearm culture. For example, those who have a blog doing reviews on range training benefit with buying 9mm bulk ammo, With a case (which is a 1,000 rounds) there will be plenty of time at the range without breaking the bank.
You do have a few restrictions that you should be aware of when it comes to buying ammo online. However, what types of restrictions you have will depend on what state you live in. For example, buying online in a few of the states can be a little more tricky.
Some of the states with online ammo purchasing restrictions include:
Before you start shopping for ammunition online, you should check with your state to see if there are any restrictions with buying ammo in general.
That way, you can make sure that you remain compliant with all the laws before starting.
Some online companies will not even ship to your state if there are any restrictions on shipping ammunition bought online. In California, for example, shipping to residential establishments is not allowed unless you have gone through the process to become a licensed dealer that has gotten a permit to receive ammunition shipments.
Walmart has decided to make a push in this way, but in truth, it may not have as huge of an effect as what they plan for at the end of the day.
The thing is, them stopping the sale of handgun ammunition will only cause a transition in the buying habits of the ammunition market. The demand for this market will be fulfilled through customers going elsewhere because the desire to buy ammunition will still remain.
Whether you think this could be a wise and calculated business move or a foolish endeavor on Walmart’s part, one fact stands clear. This won’t hurt their bottom line (by much, at least),
The companies of today have to walk a fine line in today’s persecution-oriented culture. They try to balance profits and service with the business’ image. That could be one of the reasons that corporations like Dick Sporting Goods have stopped selling guns in its stores in previous times.
All in all, there is a lot to unpack with Walmart’s announcement and it will be interesting to watch how things unfold over the next few months.
As we observe how the customer base reacts and see how the market changes there is one thing that remains constant. Bulkmunitions will always be here to give you some great deals on bulk ammo and offer a new home for those law-abiding gun owners that have been displaced by Walmart’s new policies.
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