August 09, 2010
How LuckyGunner.com Navigated the Largest Ammo Shortage & Recession in Recent History
An inside look at how an online ammo retailer, LuckyGunner.com, successfully navigated the largest ammunition shortage and recession in recent history.
Like most industries in America from the fall of 2008 until recently, the online ammunition business has been a roller coaster ride. LuckyGunner.com’s story is like most American success stories: a combination of hard work, overcoming adversity, entrepreneurial innovation, and a touch of good fortune. The co-founders, all under age 30, successfully navigated the Obama-induced ammunition shortage, the Great Recession, and the normal challenges faced by all small-business owners to transform their idea into a website specializing in ammo for sale with over $3,200,000 of revenue in its first twelve months.
Obama Victory Ignites the Ammo Shortage
Leading up to the fall of 2008, the ammunition industry in America was already showing signs of strain. The recent scale-up of the wars in Iraq and Afghanistan, after a long period of relative peace, consumed a considerable portion of the country’s dwindling ammunition production. Police departments and other law enforcement agencies were beginning to transition from just-in-time inventory to larger stock piles in response to expanding lead-times from manufacturers, who were shipping more output to the Department of Defense and other federal agencies.
Then it happened: Barack Obama won the Presidential election in November 2008. The Obama victory unleashed a wave of public opinion reverberations that ultimately led to empty ammo shelves at almost every Wal-Mart and retail gun dealer in the country. The combination of the already strained ammunition production with the changing political winds was too much. The result: a bonafide ammunition shortage that reminded every shooter in America of the practical implications of too much demand chasing too little supply.
The Great Recession Adds Fuel to the Fire
Americans were already living in uncertain times before the election of a President who many feared would be hostile to firearms and ammunition. The following events were making weekly headlines in the months preceding the election:
- Bear Sterns had been taken over by JP Morgan Chase in a fire sale to avoid bankruptcy.
- The FDIC was still digesting the Indymac Bank failure, the fourth-largest in US history.
- The Federal government had effectively nationalized Fannie Mae and Freddie Mac.
- Layoff announcements and bank failures filled the evening news.
- Merrill Lynch was absorbed by Bank of America and Lehman Brothers filed for bankruptcy.
- The Federal Reserve had just lent $85 billion to AIG to stave off bankruptcy.
- Congress was doling out billions of dollars in bailout funds.
n times like these, it doesn’t matter if you are a Republican or a Democrat, a conservative or a liberal, or if you live in a city or the country. There was ample cause for concern for all Americans. As these factors began to sink into the conscience of every day Americans, the demand for ammunition only increased.
From Customers to Co-Founders
While the confluence of the low ammunition production capacity, two foreign battlefronts, the Obama Victory, and the Great Recession created a perfect storm for ammunition demand, the recognition of these macro-forces weren’t the cause that prompted the co-founders of LuckyGunner.com to start a new business.
“We were already customers of other online retailers and simply realized that all our normal sources were chronically out of stock,” recalls one of the founders. This frustration was only compounded by the common industry practice of accepting orders for out-of-stock product and then notifying frustrated customers only days later that the order could not be fulfilled for several weeks or months. Like most businesses, LuckyGunner.com wasn’t the result of years of careful planning and a keen market insight; it was a practical solution to an everyday problem. Another co-founder recalls with a smile: “We decided to make three promises as the foundation of our company: 1. No matter what happens, we will always have a wide variety of ammo available to our customers. 2. Everything on our website will always be in stock and ready to ship or it won’t appear on the website. 3. We will fulfill orders immediately.” While their website has changed over the last 16 months, they still advertise these same principles.
Getting off the Ground
Apart from being customers of other online ammunition retailers, the founders had no previous experience or connections in either the ammunition industry or with e-commerce, but they were not first-time entrepreneurs or strangers to the challenges associated with launching a business. “We also own a construction company, a software development company, and some investment property. I know it sounds weird, but we really were able to use a lot of these same skill sets at LuckyGunner.com,” says one founder. The lessons they learned in purchasing, logistics, coding, and customer management have all been directly applied at LuckyGunner.com. “We take our jobs seriously. Whether that means improving our systems to reduce errors and costs or broadening our supplier base for our customers, this industry is changing and we want to be the tip of the spear.”
They also recall the many 12+ hour work-days spent calling suppliers, checking in products, talking to customers, improving their website, and all the other tasks that go into launching a new venture. “We have two primary groups of people we are accountable to: customers and suppliers. We take them both very seriously. For our customers, we try to design an easy to navigate website, update it with tools to make their lives easier, keep plenty of quality product in stock, and ship it fast. For our suppliers, we try to promote their brand value and new products to our customers, fulfill our commitments, and always pay on time.”
The End of the Beginning
Despite their age and lack of outside investors, they were able to quickly grow the company to over $3,200,000 in revenue in the first 12 months of its existence.
The company’s first challenges were finding supply and convincing customers to trust them. While these are still obvious priorities, they now have momentum on their side. “Now that we have a trusted reputation in the industry and a solid lineup of suppliers, we have more time to focus on driving down our costs and making our operation more efficient: both of which lead directly back to solving problems for our customers, which is the reason we started the business.”
The Path Ahead
The business environment has changed since their website was launched. High unemployment and the lingering recession are clearly impacting retail sales across the country. With the ammo shortage winding down (or already over), online ammunition retailers are no longer immune. The co-founders at LuckyGunner.com intend to keep focusing on delivering more value to customers via system improvements and product selection and pricing.
“We have a fun team and have learned a lot in the last twelve months; now we are are eager to apply the lessons and continue adding to our team, which is our biggest asset.” The rest of the team at LuckyGunner.com includes Heidi and Steven in Customer Service, Jake in Purchasing, and Angela in Marketing.
They can all be contacted at:
The path ahead for the team at LuckyGunner.com unquestionably involves more struggles and challenges, but they also insist they have a few more surprises to unveil and the energy and enthusiasm to make the future brighter than the past.