Tracking Sales In The Gun Business

posted on November 18, 2010

Continuing our look at the business of the gun business, the next component to consider is how the industry’s distribution channels further obfuscate sales trends and product demand. In many industries, a lot of data is collected in the distribution channel, but in the gun business, virtually none of this information is available to industry analysts.

What exactly is a distribution channel? It’s the mechanism for moving a product from the manufacturer to the consumer. There are three channels in the firearms business: two-step distributors, retailers and (by far the smallest) factory-direct sales. This latter category is almost exclusively used by accessory manufacturers and small, boutique gun companies, not major firearms makers for the obvious reason that an FFL transfer is required to sell a gun.

The primary channel used by large gunmakers is two-step distribution in which the manufacturer sells to a distributor who in turn sells to a retailer, thus making two intermediaries in between the manufacturer and the end-user. And here’s where the confusion arises.

Generally speaking, a manufacturer books a sale when product is shipped to a customer, but in the two-step channel of the gun business a lot of “sales” are not actually booked because of what might be called the Wimpey Plan—I’ll gladly pay you Tuesday for a gun today.

The correct term is “dating program” and it’s a way for manufacturers to even out their production in a market that’s highly seasonal because hunting gun sales are highly compressed into the four months of the fall. Dating programs are used for hunting rifles and shotguns to give a two-step distributor “dating terms” to pay an invoice. Typically, a distributor must take delivery of guns in March or April but not have to pay for them until sometime in the fall.

Accordingly, sales are not truly consummated with a dating program. For example, consider the wording of Ruger’s most recent quarterly report or the third quarter 2010:

“Estimated unit sell-through of the Company’s products from distributors to retailers in the third quarter of 2010 decreased by approximately 7 percentfrom both the third quarter of 2009 and the second quarter of 2010. NICS checks increased 6 percentfrom the third quarter of 2009 and 2 percent from the second quarter of 2010, indicating that the Company’s share of total firearms retail transactions (new and used firearms) may have declined during the quarter.”

When Ruger states “Estimated unit sell-through… from distributors to retailers,” the meaning is clearly that the company doesn’t actually know how many of its products moved through its distribution channel. Compare that to the automotive industry where Ford knows precisely how many blue pick-up trucks are sitting on dealer lots.

This is not to pick on Ruger; in fact the Connecticut-based manufacturer has developed one of the best distribution channels in the industry as evidenced by its winning “manufacturer of the year” in 2010 from the National Sports Goods Wholesalers association. It’s the fourth consecutive year that Ruger won the honor.

The point is simply that sales information derived from the distribution channel of the gun business is obfuscated with dating programs and a two-step mechanism that makes it impossible to know levels of inventory. “Sold” guns could well be sitting on retailers shelves or gathering dust in a warehouse.

Next time we’ll look at a highly misleading factor that makes tracking sales in the gun business so darned difficult.


Springfield Armory Sa35 Rifleman Review 4
Springfield Armory Sa35 Rifleman Review 4

Rifleman Review: Springfield Armory SA-35

In 2021, Springfield Armory brought out its SA-35, a rendition of the classic Browning Hi Power, one of the iconic handguns of the 20th century.

New For 2024: Smith & Wesson M&P15 Sport III

In a crowded AR-15 market, consumers are looking for the best bang for their buck. Most look no further than the Smith & Wesson M&P15 Sport, and the company has an updated generation out for 2024.

Handloads: A 10 mm Auto Loaded For Bear

The fear of a bear attack has likely sold more 10 mm Auto handguns than all firearm advertising combined. The 10 mm does deliver some impressive ballistics for a cartridge chambered in semi-automatic handguns.

The Rifleman Report: Creative Minds At Work

As all of us who experience this “mortal coil” eventually learn, the days seem more fleeting with each passing year. For those of us who make a living observing and reporting about the firearm industry, they eventually result in a somewhat disorganized pile of memories about companies, products and the people who create them.

Smith & Wesson Issues Safety Alert For Response Carbines

Smith & Wesson has identified a condition in which an out-of-battery discharge can occur when certain Response bolts fail to fully close before the trigger is pulled.

Review: GForce LVR410

With a long and storied history in the United States, lever-action carbines continue to be favorites among modern American shooting sports enthusiasts. This evaluation takes a closer look at the 24"-barreled LVR410, which is being imported by GForce Arms, Inc. of Reno, Nev.


Get the best of American Rifleman delivered to your inbox.