As everybody now knows, the ATF 41P proposal was finalized into the ATF 41F ruling at the beginning of January, 2016.
The big question now is; how will the new rule impact your business? Specifically, how will it impact your NFA & silencer sales?
We are expecting the transition to ATF 41F to go through 3 stages:
1) Record Surge in Sales
So far we are seeing a record surge in sales of all NFA items - and manufacturers are working hard to beef up capacity to keep up with the increased demand.
Anything that's on the shelf now or that's already incoming is probably going to be sold pretty quickly.
Unfortunately, this means ATF wait times are also going to start heading up pretty quickly - which will impact your incoming Form 3 approvals. Basically, getting new inventory in a timely manner is going to get harder.
2) Major Market Drop-Off
This is the "bad news" but we don't expect it to be a long term problem.
Once ATF 41F goes into effect this summer, we expect a major market drop-off - probably the largest this market has ever seen.
There are several reasons for this:
Market Exhaustion: With customers rushing to get their orders in under the current rules, using a trust, a lot of demand is simply being moved forward. Whenever that happens, you'll find a gap where that demand would have been - which we expect to be over this coming summer & fall.
Typical Summer Slow-Down: Summer is a slow time for this industry anyway, which will compound the slowing caused by the ATF 41F implementation.
Market Confusion: With the new ATF 41F ruling will come a lot of new paperwork, customer mis-information, and rule interpretation by the NFA Branch. This will also contribute to the slowdown until the market & the NFA Branch can figure out how the new system works.
Longer Wait Times: With the increase in paperwork caused by 41F, it's highly likely that wait times will go up significantly. The ATF even mentioned this in their final ruling.
This will be mitigated - to some small degree - by a temporary surge in individual sales; but, that will be a drop in the bucket compared to the trust sales that go away.
For anybody who's been in this business for long, you know this will be the scariest phase - because you run the risk of ordering a lot of inventory to cover the surge in sales, only to have it arrive too late...
3) Rebalancing Under the New Rules
By next year, we expect to see a market rebalancing - and a continuation of growth. Mostly because silencers sell themselves, and it's hard to imagine not using one once you have.
Even though trusts are typically a better way to purchase a suppressor, we expect the new rule to push many customers into registering as an individual. It will be interesting to see what the actual trust to individual ratio is once the dust settles on this ruling.
Unfortunately, the suppressors that are in demand now probably won't be the same models customers will be asking for by the time this rebalancing occurs.
How Can You Mitigate the Risk?
1) Use Our Inventory
By selling directly from our inventory using the Powered By Silencer Shop & Buy It Local programs, you don't need to accept any of the risk of inventory management.
Managing NFA inventory is going to be extremely difficult this year because of the rule change. It definitely isn't a year to purchase a large package deal at SHOT and then sit on it until it sells. Especially siince you may not even get it until 41F is already in effect.
2) Use Our Resources
We have an unmatched selection of silencers available to you and your customers, with a knowlegeable staff and streamlined purchasing experience.
Since we're focused entirely on the NFA industry, we'll work to make the transition to 41F as simple as possible for our dealers.
3) Use Our Technology
New features and capabilities are being added to your dealer account continuously. Stay on the cutting edge of the market with a few of the programs that will launch early this year:
The ability for you and your customers to finance purchases
A new “kiosk” style mobile platform for you to use for seamless in-store sales
Here at Silencer Shop, our goal is to let you focus on your business as much as possible. We work hard to supply you with the technical data, product reviews, and access to the newest models so you can be as successful as possible.
Let us worry about the ATF forms and regulation changes, so you can stay focused on growing your business and keeping your customers happy.