This screen capture from 2011 is what used to come up when you searched for a specific gun on Google and clicked the Shopping tab. Google would try to guess at what you were looking for and match it to the SKUs in Googlebase, which was the engine for Google Shopping. We have rubbed out the first two here because they are the kinds of the internet bottom feeders.
by Paul Helinski
This week Google announced a major change in the way it runs Google Shopping, which is the “Shopping” tab on the left when you search. Guns and gun stuff will no longer be allowed. Google Shopping will now comply with the rules for Google Adwords, which has not allowed advertising for guns for several years now. Google is an anti-2nd Amendment company. This is not a new angle for Google. Like all of the Silicon Valley do-gooders without a clue, Google is clueless.
At this point, who cares? As we explained in our Monday Memo that goes out to our stocking gun dealers here, this past week the Supreme Court said it was ok for the government to force you to buy something you don’t need or want. We aren’t going to cure America’s ills here at GunsAmerica, and 2nd Amendment freedom isn’t the worst of our freedom that the government has co-opted in the last several years. But we can explain what losing Google Shopping means for the gun industry, our 2nd Amendment freedom as it stands today, and for tomorrow.
Believe it or not, for long term 2nd Amendment freedom, losing Google Shopping for guns is not a bad thing. It means that less internet bottom feeders will be able to easily steal sales from the shelves of stocking gun dealers. As a consumer this may be difficult to swallow, but if you understand the big picture it becomes very clear that profitable stocking gun dealers mean gun freedom for all of us, and the internet has been for the most part the enemy of the stocking gun dealer for quite some time. This is a slightly long explanation, so if you are standing in line at Subway reading this on your phone, you might want to skim to the end.
Guns are unlike any other consumer product in the United States, except maybe prescription drugs to some extent. You can never just click “Buy It” on a gun, plug in your credit card info, and have a gun shipped right to your door, like you can with a pair of sunglasses, a TV, a cellphone, or guitar. Guns have to be sent to a Federal Firearms Licensee dealer in your state, and they transfer the gun to you. This came about through the National Firearms Act of 1968. Prior to that, you could order guns through the Sears catalog, buy them at Montgomery Wards, or even your local hardware store. Since 1968, every gun that is sold over state lines has to go through a dealer in some way, and anyone doing business in guns at all is required to have an FFL license.
That makes FFL gun dealers, when you think about it, our lifeline to 2nd Amendment freedom. Without people who go through the rigmarole of applying for a license and getting themselves set up, we would have no place to buy a gun. Stocking gun stores are the most invested in our freedom, often risking millions of dollars in inventory on the floor that could be banned individually or in bulk at any time. Think about that. As much as we treasure our 2nd Amendment freedom, how often do we think of gun dealers as anything but another business making money from us? The problem is really that they don’t even think of themselves that way, but it is true. Without gun dealers, we’re screwed.
Guns, on their best day, are a very low margin product. It is not uncommon for the markup portion of the sales price of a firearm to be less than 10%, and 25% is considered exorbitant on most guns. Compare that to traditional retail markup which is usually 50%. Electronics and some other products have been shaved over the years, thanks to the internet, but guns are still considered very low margin in comparison to most retail. Most gun shops are “mom and pop” stores, run by the owners, and even the big multi-stores, like Carter’s Country in Texas are surviving from ancillary sales far more than from the guns themselves. There isn’t a lot of money in guns, and there never really has been. Historically, gun margins were kept very low by what, since 1968, became “tabletop” or “basement” dealers, who didn’t have a store and sold guns on the side at extremely low margins. At their peak, there were over 300,000 FFL licensees in the US, and the overwhelming majority of them were tabletop dealers.
Now, rewind back to the Clinton era, when the Brady Bill was passed. This implemented the national background check, which we call the NICS check. It also changed the fee for an FFL from $30 to $600. The result on the national population of FFL gun dealers was a decline from 300,000 FFL licensees, to 50,000 licensees. Just to demonstrate just how fickle and uninvolved the tabletop dealers were, the changes in the requirements for being a dealer were:
- A new phone call you had to make.
- A change in the fee to roughly the profit on 5-7 guns.
The internet gave a new lease on life to the tabletop gun dealer. Suddenly, the whole world opened up, and you could sell as many guns as you wanted to strangers, as long as they had a receiving FFL called a “transfer dealer” on the other end. A few smart entrepreneurs realized that they could put up the entire manufacturers catalogs on their websites and take orders, and the consumer would never know that they were not a gun shop at all. So that is what they did. A few actual gunshops with internet savvy programmers even got involved, and, with no real margin and no inventory to maintain, they could beat the price of the stocking dealer but at least a few percentage points. For gun buyers that was enough, even if they saved little in the long run, and what we call the internet bottom feeder was born.
GunsAmerica started in 1997 and was the first fully automated buying and selling site for guns online. Initially only collector guns, and just used guns in general came onto GunsAmerica, but slowly, especially after Ebay banned guns in 1999, and other fully automated gun auction sites came along, new gun sales crept onto the internet here too, and this was led primary by the remaining “tabletop” or “basement” dealers, while the gun shops languished, trying to just understand how to send email, never mind sell guns online. To this day there are gunshops struggling to survive on purely brick and mortar operations, ignorant that they could be selling pretty much every used gun and most new guns in their store to you folks online. Meanwhile consumers buy guns behind their backs and ship them in for transfers, and the gun dealers have simply never woken up to the reality of the internet and how it has changed the whole world of retail.
This has put the mom and pop stocking gun dealer in a very difficult situation. Without even realizing it, stocking gun shops have become the “catalog showroom” for the internet. Savvy consumers, which now is almost all consumers, go into the gun shops to fondle the guns, then they look for a cheap price online. Everyone reading this is a GunsAmerica subscriber, and many of you have actually stood in gun shops and checked internet prices right in front of the store clerk. I have witnessed this myself on several occasions in both the Bass Pro here and two local gunshops. The buyer is standing there, holding the gun in the store, and simply buys it online and ships it to the very store he is standing in. He doesn’t pay sales tax in most states, so that often covers the modest “transfer fee” that the dealer manages to squeeze out of the sale he never made.
Everyone thinks that “record gun sales” have meant a huge profit for gun shops, but what it really has meant is a huge profit for a select handful of internet entrepreneurs selling hundreds of guns each per day for extremely small margins, far below the prices that the gun dealers are able to sell for. Several of the major industry distributors have even set themselves up to drop ship guns for some of the more well placed discount websites, though one of them claims to have halted the practice after we called them out on it in our dealer newsletter several weeks ago.
Some would argue that the “transfer fees” for stocking gun dealers are a good thing. A recent article in a major gun industry publication claimed just that, but the article was written by the PR director for one of the major gun auction sites. This was conveniently left out of the bio on the writer, and it was treated as legitimate research. Gun dealers have been misled into thinking that the internet bottom feeders are a good thing and that the transfer fees are pennies from heaven. Ask any stocking gun dealer who is not himself heavily involved in internet discount sales and they will tell you that this is completely wrong. Gun shops have become indentured servants to the internet. Those guns on the floor were meant to be sold with real margins, not left to sit while several of that model comes in from online sales as transfers.
I suggested back in a lecture at our booth in SHOT Show 2009 that the dealers modify their transfer fees to better reflect retail margins on guns, and the fake PR research article did mention my ideas (without credit of course). We have also tried to expose all of the distributor inventory to consumers through the stocking dealers with our Guns On Demand system, but getting the industry behind it has been no small task. Meanwhile, partially do to Google Shopping, which is now thankfully coming to a close, the stocking dealers have been left out in the cold, while the industry publications, trade groups, and even their own distributors convince them to continue losing sales to low margin internet bottom feeders. You can only manipulate transfer fees so much, because there is always going to be a new tabletop FFL who will take the transfers for less. Managing whole catalogs of even Guns On Demand inventory is time consuming for a a mom and pop store with limitted resources. Now that the industry has seen what one dogooder anti-gun keystroke decision at Google can do, I hope they will wake up and protect the dealers from having to compete with internet bottom feeders that have no inventory and no overhead.
You won’t find a Gibson guitar for sale on the internet for under what is called “Minimum Advertised Price,” or MAP. You won’t find Oakley sunglasses under MAP (shout out to former Beretta GM Christopher Merritt). You won’t find a SONY television under MAP, and you certainly won’t find a Motorola phone under MAP. All of these industries are protecting their dealers with MAP. It isn’t that the dealer can’t sell for less. They just can’t advertise for less. It isn’t price fixing. It is perfectly legal. And every other major retail industry has had to deal with this since the advent of this amazing communication tool called the internet.
Why isn’t the gun industry enforcing MAP you might ask? We have no idea. GunsAmerica has been beating this drum since 2007 after extensive research involving a few major manufacturers, and personal advice from the CEO of one of the biggest companies in the gun industry. Some manufacturers have indeed caught on. You can’t post a new Barrett for $20 under MAP on GunsAmerica without getting a call from them, explaining that Barrett enforces MAP and that if you want to sell Barrett firearms, you have to raise the price. We just experimented with this using a dealer here and indeed, they got the call. But what about the other manufacturers? Hopefully they will come around soon.
Google Shopping was a major doorway for consumers to find the internet bottom feeders. It was painfully easy to load up Google Shopping with XML data feeds from the distributors, which in turn listed every gun for sale from that distributor in Google Shopping from your online store. We loaded all of the GunsAmerica listings into Google Shopping for our sellers briefly in July of 2011, but they banned us for no reason, probably because they knew this was coming and they would have shut off thousands of sellers who would make a stink, not just the handful of savvy internet mavens they shut off this week.
It is difficult as a consumer to support higher prices, we know. In fact, since we have been beating the drum about stocking dealers the biggest question most people ask is why GunsAmerica even takes this position. We are of course a purely online gun buying and selling website. The answer is that GunsAmerica has since the beginning run on passion for guns, shooting, and 2nd Amendment freedom, not a drive to make more and more money. Guns and 2nd Amendment freedom is a big picture that is the cornerstone and foundation of all of our Constitutional freedoms, G-d given freedoms really, guaranteed in America by the US Constitution. The 2nd Amendment was 2nd for a reason. Gun rights aren’t about hunting. Support your local stocking gun dealers and you support the 2nd Amendment. We saw back in the Brady era how fickle the tabletop dealers are. If the next administration, (and don’t be fooled, Romney is no friend of the 2nd Amendment), passes any new tax or rule on gun dealers, all of those remaining tabletop guys will give up their FFLs, as will the internet entrepreneurs. Then the only ones standing will be the local stocking dealers, and if they go out of business in the meantime, then nobody will be left standing, and like they have had to deal with in Washington DC, there will be no place to buy a gun.
So as much as we condemn Google for their anti-2nd Amendment policies blah blah blah, there is nothing new under the sun here people. Retail giants Amazon and Ebay haven’t allowed guns for over a decade, and Google Adwords have really never allowed guns. The real question is why is it that GunsAmerica is the only ones talking about this, about MAP, and about protecting the stocking gun dealers? It is the same reason you should invite your friends to subscribe to GunsAmerica. There is only one gun website that does not take banner advertising from internet bottom feeders , or “training” scams, or anything else that takes advantage of the gun buying public and threatens our long term 2nd Amendment freedom. Stand with GunsAmerica, and stand for liberty.