Part of what makes AmmoSquared unique is this idea of storing ammunition for customers on a long term basis. While this is unique in the gun industry it is known the world over for precious metal ownership. Our model has elements similar to how custodial gold companies operate: these are companies that let you purchase physical gold (and other precious metals) then store your holdings for you over the long term. (There are more nuances depending on whether the gold is allocated, unallocated, or pooled. You can read this blog post from the Perth Mint that explains these terms.)
What is an Ammunition Reserve?
At AmmoSquared, our customers are literally accumulating and storing ammo with us in a sort of AMMUNITION RESERVE. Basically, they set up an account to buy a little bit of ammunition every month just like someone buying physical gold might do. All of the ammo is physically warehoused together in an ammo “pool” (if you read the article above, ammo is “unallocated” while gear items are “allocated”) and then shipped on demand or via an automatic trigger.
It is a unique approach no doubt, but why do it this way?
Many of the benefits to our “ammo reserve” approach are similar to why millions of people have physical gold stored in custodial precious metal accounts:
Convenience – it is much easier to set up an account online and have ammo added to your personal ammo reserve every month automatically then it is to make frequent purchases from online sellers, wait around for delivery, then find a place in your home to store everything (preferably someplace cool, dry and secure!).
Safety – by keeping some of your ammo off-site, you keep it safe from theft, fire and natural disasters such as flooding. It also means ammo is kept safe from day to erosion caused by temperature fluctuations and moisture.
Cost Control (aka Budgeting) – precious metal reserves operate on the idea of “dollar cost averaging” or putting a little bit of money away on a regular basis to build up an asset base. We do too. You set up your budget, pick your calibers and let it do its thing automatically over time.
Ease of Switching Calibers – most online precious metal holding companies let you switch between different asset classes such as between gold and silver, or platinum and gold. AmmoSquared lets you do the same thing with calibers. For example, let’s say you accumulated a bunch of 9mm then decide you want to convert some or all of it to 10mm because you purchased a new toy. You can do that. Try that with physical cases sitting in your garage!
Push Button Delivery – we all want to shoot our ammo eventually and not just collect it on paper (or online). So we made the ammo request process as simple as possible – literally, just tell us if you want to buy up your partial boxes or not. We take care of the rest.
Variety – when we ship, we try to mix things up. When you get a box of ammo you will get a nice variety of budget, mid-range, and premium ammunition. We also look for unique or special offerings and include those whenever possible. Since ammo is being cycled monthly, each time you get a shipment you are going to get something different.
Fresh Inventory – unlike buying a bunch of ammunition and storing it in your garage for 10 years, if you have ammo stored at AmmoSquared it is constantly being refreshed as new inventory comes in. Whenever you request your ammo you won’t be getting the same ammo that was in our warehouse when you started your account, it will be fresh recently manufactured ammo.
For more detail about how this work let’s get into the brass tacks of how your “ammo reserve” is allocated and stored:
How does ammo storage actually work?
We purchase ammunition and store it in our temperature controlled warehouse in what is called “non-segregated” storage. That means that we don’t break cases and put everyone’s ammo in little separate cubbies. Everyone’s ammo is pooled together. You know exactly what you have (even down to the fractional round) by looking at your inventory online. On the flip side, we know what we should have on hand and need to purchase by totaling up everyone’s inventory. Depending on the caliber, we try to maintain 97% to 115% of total customer inventory in physical storage, with some fluctuation based on incoming and outgoing shipment timing. Your personal inventory is part of the inventory in the warehouse but the actual brands and make up of that inventory changes monthly as we ship out boxes and get new inventory in. For most of the popular rounds, we completely cycle through our inventory 4-6 times a year. That means that what you are getting has only been on our shelf for 2-3 months max. For less common calibers it depends on the demand, but will usually be fully cycled 1-2 times per year depending on the caliber.
That is how we can provide both fresh inventory and variety to customers who get a box delivered. That is also why we can’t guarantee certain brands or bullet weights (we try our best though). Every month we get new customer orders and we purchase an equivalent amount of ammo from our distributors. If one of them has a special sale or a limited time offering, we might pick some up and include it in the next few months shipments.
Gear is different.
While ammunition is pooled together and constantly cycling, gear purchases are actually directly allocated to the customer and set aside, ready to be sent with their next ammo shipment. This is why we have a slight delay after someone places a gear order before we are able to fill it – because we add the item to our next large ammo purchase order with our distributor. Once that gear item (magazine, cleaning kit, etc.) comes in, we put it aside in a special area of our warehouse with numbered shelves that correspond to each customer who is accumulating gear items. When we get a packing slip for ammunition it will tell us that we need to grab the gear item(s) off the shelf and include them with the outgoing box. In this way, you can add a few dollars worth of kit (magazines for example) to your inventory each month and not waste money on shipping it separate like you would if you had ordered online from a traditional retailer.
We also maintain an unallocated supply of some of the more popular magazines such as PMAGs and Hexmags so they are ready to ship. We try not to buy too far ahead on gear items because we are not a traditional gun store that stocks inventory – plus there is no way to know exactly what people are going to purchase and we would rather our money isn’t tied up in unused inventory.
So that should give you a good idea of how inventory works at AmmoSquared. As always if you have any questions you can reach out to us anytime at [email protected]