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09May, 2017

Meet Weapons Industry Challenges with E-commerce

Author Matt Category

Disclaimer: i95Dev does not support or promote any form of gun-related violence. All views expressed in this blog are of authors and written keeping the responsible players in the weapons industry in mind.

Sale for firearms is a very sensitive subject with strong proponents both in favor of and against it. Because of the nature of the industry, businesses in the weapons industry always had to deal with stringent federal, state, and local laws to sell firearms through the brick and motor stores. If that was not enough, there has been a decline in the number of gun owners and gun sales – from 31% in the mid-1980s to 22% in 2015.

Upon observation, we found that most players in the weapons industry still rely on traditional marketing methods – methods that are no longer effective in cost and reach. There are many shoppers out there, who rely heavily on e-commerce medium even for their daily grocery needs. It is high time that firearms dealers start adopting an e-commerce platform to counter their declining sales.

Companies like Beretta and Mossberg are living example of this who are breaking the mold by adopting successful e-commerce strategies. Consider this, according to a Hubspot, Beretta has converted their sales from organic search by 76%, attained a 15% conversion rate of social media visitors and drove nearly 4,000 sales in a single day during Black Friday.

Interested? Read on.

In this blog, we will look at a few unique challenges faced by businesses in the weapons industry in America, how e-commerce can help them, and other recommendations to improve sales and operations.

Top Challenges in the Weapons Industry

Every industry has its own share of problems and weapons industry is no different. While some of these challenges are common across industries, others are unique to the weapons industry thanks to the strong anti-gun lobbying and stringent government rules (because of security concerns).

Declining Sales

As mentioned earlier, there has been a decline in the number of gun owners and gun sales – from 31% in the mid-1980s to 22% in 2015. Gun retailers, most of them operating out of physical stores, are facing saturation in their traditional market of gun enthusiasts and are struggling to attract new customers. In addition to this, there has been a drastic decrease in the number of FFL dealers from 245,628 in 1994 to 56,557 in 2016 (a 77% decrease).

Strong Emotions in Favor and Against Sale and Use of Guns

Owing to the history of gun culture in America and with different governments taking sides in favor of and against of use of guns, emotions run high in the industry. While this also works in the favor of the industry, their strength is also their weakness.

Federal, State, and Local Laws

With the increase in crimes related to illegal guns, tracing the weapon used in the crime becomes difficult for the law enforcement. This lead to taking stringent measures such as taking the necessary permit from ATF for merchants to sell firearms, failing to comply these measures would result in a fine of 250,000 USD or a prisons term of 5 years or both. To top these, there are different state rules governing different states of America. Merchants planning to sell firearms need to take stringent safeguards to help them sell their merchandise responsibly.

For further information of our readers who are planning to obtain FFL under federal law, you can find more information chere.

Inventory Management

The wild fluctuations in the industry, owing to speculations and fears, has had a huge impact on the industry. Because of this, the dealers are cautious of how much inventory they should stock.

Customer Education

In addition to educating customers on the responsible use of guns, businesses are also having a hard time educating customers about the utility of product itself. For example, a number of customers look at this as a means for entertainment and not self-defense.

Here is what the Strategic Operations Manager at Shoot Smart Jared Sloane says, “In the retail segment of our business, the biggest challenge we face is product selection for a new audience. We’re looking for new items that appeal to a broad, diverse audience, with little to no experience, and more interest in having an entertainment experience rather than a skills or self-defense experience”.

Advantages of Embracing E-commerce in the Weapons Industry

Target a Wider Audience

The e-commerce trends indicate that the world is moving online. The new generation customers are raised in the digital world. The businesses in the weapons industry, to better target these customers and stay relevant, will also have to consider moving online. In addition, because of the increased saturation in the local market, businesses also need a tool they can use to target customers beyond their existing market (not limited by their physical store’s presence).

Showcase Products on Third-party Marketplaces

The popularity of platforms like Gunbroker.com is well known. While some businesses take advantage of selling on these platforms, others refrain from selling because of the increased overhead involved. An e-commerce platform can significantly reduce the overheads required to sell on additional platforms like Gunbroker.com. How? By integrating e-commerce with these platforms to automate information exchange between them. This not only reduces the operational overhead but also helps in providing improved customer experience across platforms.

Tax Advantage

There is no sales tax on firearms sold online unless the sale is from the state. You have heard it right – there is no sales tax for online sales unless the sale is from the state. Because of this, a lot of people consider buying firearms and ammunition from interstate retailers with an e-commerce store.

Drive Better Compliance and Simplify Buying Process

Abiding by ATF compliance is of prime importance for any firearms retailer (selling online or at a physical store). Retailers can increase their sales if they could simplify their buying process. With e-commerce store, retailers can do just that and without compromising on compliance. Businesses can make customers fill the eForm 4473 online and automatically transfer this and other information to the ATF database by integrating e-commerce store with ATF database. With this level of automation, businesses can easily abide by ATF compliance and deal with ATF inquiries regarding the acquisition and disposition of firearms.

Disable Manual Shipping

Online firearms retailers cannot directly ship a product to a customer. The products have to be shipped to the nearest FFL dealer and the customer has to pick the product from there. An e-commerce store can simplify this entire process without increasing the operational overhead. Businesses can customize their e-commerce store’s checkout page to stop accepting shipping address manually and instead ask for a zip code and provide the list nearest FFL dealers. Businesses can even offer the same functionality on Google maps to further improve the customer experience.

Improve Profit Margins

Many firearms retailers, maintaining only a physical presence, are witnessing a decrease in their profit margins because of the rising overhead costs of maintaining inventory in a physical store, middlemen involved, and more. With e-commerce adoption, businesses can not only eliminate middlemen and reduce operational costs but also churn out inventory faster resulting in improved margins and ROI.

Improve Discoverability and Run Targeted and Personalized Promotions

The Google diktat makes the promotion of weapons difficult for sites selling firearms and ammunitions. While this limits both online and physical store owners, online owners have a better chance of improving their discoverability through SEO.

In addition, businesses can better leverage e-commerce’s marketing features to increase sales by running targeted and personalized promotions. The personalization can be taken a step further by integrating the e-commerce store with the ERP system. By syncing customer order history, payment methods and patterns, product preferences between e-commerce and ERP systems a clear pattern of the customers’ psyche can be drawn which can then be used to offer personalized discounts, cross-sell and up-sell products, and more.

Other Recommendations to Improve Sales and Operations

While e-commerce store can hugely benefit firearm businesses, here are some additional recommendations that can help them drive sales and streamline their business further.

Integrate E-commerce and ERP Systems

We can never emphasize enough about the benefits e-commerce and ERP integration can drive for businesses. We will quickly make a point with the following examples.

  • Inventory – E-commerce and ERP integration enables businesses to manage inventory better with sales happening across multiple channels. The integration ensures accurate inventory in the e-commerce store, helps you in automating stock replenishments, and more.
  • Tier Prices – As a weapons dealer, you cater to different types of customers like law enforcement officials, military personnel, gun club members, etc. You sell them products at different prices dictated by the order volume and pricing rules defined in the ERP system. By integrating your e-commerce and ERP system, you can offer your customers the same convenience and experience automatically.

For more benefits, refer to our e-book 18 Crucial Reasons for E-commerce and ERP Integration.

Expand your Service/ Product Offering

Yes, get creative and expand your offering beyond selling firearms and ammunition to include additional services like

  • Gunsmith Services – send scheduled reminders to your customers about servicing their weapons
  • Shooting Range Appointments and Booking – give your customers ability to view the availability of shooting lanes and make a booking online, and more.
  • Collaborate with Gun Collectors – there are a number of gun collectors who can spend any amount of money to collect artifacts such as the World War era ‘Lee Enfield Rifle MK4 no 1’ or the ‘Belgian Nagant revolver’. If you get your hands on any special weapon, go through your database to identify customers who might be willing to pay you a good price.

We have worked with clients in the weapons industry to help them drive sales and streamline their business processes.  If you too would like to leverage e-commerce and ERP integration to your advantage, contact i95Dev here or drop us a line at info@i95dev.com.

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Meet Weapons Industry Challenges with E-commerce