LAST POST

DEMAND AND SUPPLY

SUPPLY OF AIRSOFT GUNS AND GEAR HAS BEEN A LITTLE “PROBLEMATIC” RECENTLY, WITH CONTAINER DELAYS FROM THE FAR EAST, AND MASSIVELY INCREASED COSTS! ALTHOUGH THINGS DO SEEM TO BE EASING, FRENCHIE LOOKS CLOSELY AT WHY THIS SITUATION MAY BE, IN SOME WAYS, HERE TO STAY.

In the ‘traditional’ supply chain model goods go from producer to distributor and then to retailer. For a long time Airsoft bucked that trend with retailers importing directly, either from producers or from overseas distributors (Marui products are a good example of this). This led to an interesting situation where retailers could and did end up also acting as distributors, supplying goods to other retailers for resale.

This model was not without its problems. The first was one of scale; producers wanted to sell as much product as they could and your average UK based retailer could seldom commit to purchasing in the sort of quantities that satisfied that requirement as it required a substantial investment in stock which had to be sold to recoup the investment and turn a profit. This was exacerbated by the fact that other retailers have proved reluctant to buy from what is literally their competition. There are many levels of distrust operating here but one of the principal ones was the fear that a “distributor” would take advantage of the actual cost of goods to them and undercut their own customers, other retailers.

There was one individual who was notorious for doing just this, and those of us who have been involved in airsoft for long enough will know whom I am referring to. Suffice it to say that I suspect that many people’s experience of this practice has resulted in a lingering suspicion about the motives and morals

of other retailers engaged in distributing airsoft equipment. This aside, there was also a complete lack of dedicated wholesale outlets in the UK who could supply airsoft-related gear. There were a couple of businesses who dabbled in the cheaper reaches of the industry but they were first and foremost suppliers to the gun trade and their attitudes reflected that. That lack of stock that retailers actually wanted allied to a tendency to threaten legal action if the day had a ‘y’ in it did nothing to improve and advance relationships between them and the majority of retailers. This situation pretty much pertained up to the advent of cheap ‘ChinaSoft’ imports. It’s hard to explain to anyone who wasn’t into airsoft at the time what effect the influx of cheap airsoft guns from China had on the market. For those of you that missed it, we went from a situation where an AK47 would cost you around UK£200 without hi cap magazine or battery, to being able to buy one for around UK£70 that came with battery, charger and hi cap magazine as standard. I remember literally piling Chinese-made guns high in the shop and selling them hand over fist. While not solely responsible for a swathe of bedroom-sellers, the ability to buy airsoft guns for not very much, bang on a bit of profit and still sell them for less than bricks and mortar retailers changed the market substantially. This was very much a “caveat “IN THE ‘TRADITIONAL’ SUPPLY CHAIN MODEL GOODS GO FROM PRODUCER TO DISTRIBUTOR AND THEN TO RETAILER. FOR A LONG TIME AIRSOFT BUCKED THAT TREND WITH RETAILERS IMPORTING DIRECTLY, EITHER FROM PRODUCERS OR FROM OVERSEAS DISTRIBUTORS (MARUI PRODUCTS ARE A GOOD EXAMPLE OF THIS). ”

emptor” market as you couldn’t expect any serious after-sales service from many of these sellers, but airsofters are nothing if not bargain hunters and if they can get the same gun for substantially less from “Airsoft Iz Uz!”, they’ll do it. This was the only period during my time in retail that I was regularly unloading containers of guns, they were that cheap that shops could afford to buy in serious bulk.

A CHANGING MARKET

Nothing lasts forever and a combination of circumstances conspired to throttle this runaway market. Firstly, as far as we could tell, actually producing airsoft guns in China was illegal and as a result shipments could depend on the payment of appropriate ‘considerations’ at the right time. Moreover delivery could be, and was, interrupted for long periods when the authorities cracked down. Stories of raids and jail sentences trickled through the grapevine. In short, yes it was cheap, but it was becoming less reliable. At the same time companies like G&G in Taiwan took a look at the market share they were losing and decided to do something about it. We started to see models like their Combat Machine series which were simple AEGs, offered at reasonable prices (around the UK£100 mark if I recall correctly) and which performed superbly for the money. No need to strip, clean and tweak these guns, unlike many of the Chinese offerings. Others followed suit and we started to see some Chinese products appearing in the offerings of the big European distributors, now properly licensed and a bit more expensive. The direct to market days were over. It was around this time that the wholesaler in airsoft began to assume their allotted role. One of the biggest, Action Sports Games (ASG) from Denmark had been around for years but had never really penetrated the UK market. That started to change. Supply was reliable, products were getting better, even where they were fundamentally the same Chinese equipment we had been buying for years previously, and there was proper support. To a retailer that last point is more important than you might appreciate. I have personally been in the position of emailing ASG (in this case) looking for spare parts to repair a customer’s gun. I got them quickly. That is literally gold; the customer is happy and trusts us, we’re happy and trust the distributor to have our back, and the distributor should be happy because we’re increasingly likely to put more business their way. That’s how the model should work. Buying directly meant as retailers we had pretty much no after sales support at all.

We would see Nuprol establish themselves firstly as distributors of WE pistols in the UK and rapidly expand their offerings by bringing in a lot of the better Chinese made accessories, PEQ boxes, holsters, cases, slings, masks, the whole kit and caboodle, in addition t establishing their own range of AEGs and BBs. From a retailers point of view if we had a problem

“IT WAS AROUND THIS TIME THAT THE WHOLESALER IN AIRSOFT BEGAN TO ASSUME THEIR ALLOTTED ROLE. ONE OF THE BIGGEST, ACTION SPORTS GAMES (ASG) FROM DENMARK HAD BEEN AROUND FOR YEARS BUT HAD NEVER REALLY PENETRATED THE UK MARKET. ”

our solution was now in the UK. Yes, wholesale ‘warranties’ are limited, but any business worth its salt won’t leave customers hanging.

ASG had established a presence in the UK, but would go on to open a full-blown office to service their customers. With the addition of Tim Wyborn iWholesales expanded even further, offering a range of products to the market. The scene was changing, it was finally maturing…

One role that distributors perform is to winnow the wheat from the chaff; many of their products still come from China but they are of better quality and design. During the ChinaSoft boom customers didn’t believe that goods were available in various grades, with prices to match. Some discovered this to their cost when their ‘bargain’ turned out to be less than fabulous, like Action Army L85s in which the gas block was in the wrong place with no way to shift it. Oops! No wonder the front end would stay on. Retailers still import, and some still distribute within the market, but it is less common than it was and the wholesalers seem to have become accepted as providing a useful service.

THE TRUTH OF IT

I have spent January chatting with UK-based distributors and what follows is taken from my conversation with Gareth (Gadge) Harvey of ASG UK, however the points he makes seem to reflect the general trends and experience of distributors over the past several years. I started by inquiring about the general health of the distribution sector, as we have all had a torrid time of it over the past two years especially. Gadge was more upbeat than perhaps I expected:

“Speaking for ASG, we’ve seen things actually go from strength to strength, we’ve actually had an increase in orders from distributors despite the issues of Covid 19 and global shipping. I would say things are pretty healthy for distributors when it comes to ordering our products.” I then moved on to the more general subject of retailers being seemingly more willing to use distributors than was the case many years ago. Were those actually doing the distribution seeing that, and if so, why the change?

“I think that ‘minimum order quantities’ imposed by other distributors have made it difficult for small stores to order from manufacturers/suppliers directly. At ASG we don’t have those restrictions so we have a healthy mix of independent retailer orders just for their shop and massive orders from distributors to supply to their own follow-on chains of stores they supply.”

We moved onto the role of distributors within the airsoft market. By the time I left Landwarrior (about four years ago now), it appeared to me that UK-based distributors were much more important to retailers than had been the case, say, 10 years ago. Am I wide of the mark here? Assuming I haven’t dreamt this, what do you think has driven this change; more problems with importing goods facing retailers? Improved choice and service from distributors? Better value? Higher costs and greater admin overhead of direct importation?

“I think you’re right; distributors have really come into prominence over the last ten years in the UK and they are a vital link between wholesaler/manufacturer and smaller stores for some of the reasons like MOQ and shipping we mention above.

It’s really a big mix of things that can make buying via a distributor sometimes a more attractive proposition than buying directly though. Many wholesalers/manufacturers and distributors have a ‘volume’ based discount scheme so you’ll save a lot more buying 200 of an AEG than you would buying just two (this could be as much at 20 per cent off from the original manufacturer) So if you combine that with maximising the content of a shipping pallet as we mentioned before you see that a distributor working in bulk can make great savings and they can in turn pass this onto the stores they supply and hopefully those savings get passed to the end user. The other issue is the speed you can get your order. If you’re working with a distributor based in Europe (or the UK) you’re obviously going to get your stock supplied faster to your store than if you’re using someone based in the Far East. For many small stores that operate ‘day to day’ this is important as they need to buy stock on a weekly or even daily basis whereas a larger company can afford to make a big monthly purchase and maintain a larger inventory of items.”

Supply chains and transport costs. It was suggested to me by a retailer recently that the global spike in shipping costs is going to feed heavily into product

prices; do you think they’re wrong in that assessment? Are we likely to see sustained across the board price rises within the market as a result?

“Well the cost of raw materials and shipping has gone up drastically. For example a shipment that might have cost UK£1500 to get from the Far East to the UK in 2018 for instance will now cost you closer to UK£6000. Costs have gone up to the ‘end user’ a little bit (and of course to the store as well a little more) but in no way are those increases proportional to the costs the manufacturers and distributors are bearing the weight of. Will this go down? Who knows, I mean if you are a global shipping company and you KNOW you can charge six thousand for a service and there is a high demand why would you reduce that fee? The law of supply and demand states that costs will only go down if we find more accessible raw materials or more shipping becomes available to transport it. At the moment not only are shipping costs much higher than they used to be but a shortage of carriers and delays getting in and out of ports (due to many being closed at times) means that the actual ‘wait time’ on an order has increased dramatically too leading to some other companies being critically short of stock.

These circumstances mean that a small order that would be previously sent on a shipping pallet is sometimes placed by smaller stores through one of our sub-distributors rather than directly to us. This is purely because the cost of shipping by pallet is constant , whether it is full to the brim or not, and if you only want , for example, five AEGs you don’t really want to have to pay the shipping for a pallet that could hold fifty but a pallet is the ‘industry shipping size’. At ASG we can ship some items via airmail (particularly smaller consignments) but once the order gets to a certain weight it really needs putting on a road/sea freight pallet.”

How has Brexit affected you in the UK? I appreciate much of your stock will come from ‘third party countries’ i.e. countries outside the EU, but ASG, with their base in Denmark and other suppliers like Umarex in Germany will have to deal with this.

“I don’t think Brexit has benefited anyone of the ‘normal people’ of this island. For me personally it makes getting to my office in Denmark a bit more of a hassle than it used to be! In very real terms it made shipping items into the UK much slower as many people, including border checks and customs, were just not properly prepared for it. For the average airsofter it’s been bad news for sure as the days of buying directly overseas for a ‘bargain’ are over, but then what did those who voted for Brexit expect, you can’t leave a club and still want access to the clubs facilities! For ASG it’s largely been business as usual as we’re an international business with the majority of our customers (as in our ‘business to business’ customers) based in Europe and obviously as a Danish company… we’re still in the EU! There was an initial ‘difficult period’ that slowed a few deliveries down as new regulations came into play but I’m pretty sure it’s back to normal for UK orders now as well.”

It’s always nice to have your personal observations confirmed by those who deal with these matters dayto-day and time will tell just what effect the global shipping issues and Brexit in the UK have on prices. The rise of airsoft distribution within the marketplace has been a long time coming and it’s probably significant that professional distribution companies are going from strength to strength as they occupy a very different business space from their customers. That lack of potential competition or conflicts of interests has probably gone a long way to reassuring retailers that this is both sensible and sustainable and there is sufficient competition between wholesalers to ensure that their offerings haven’t restricted choice in the market.

Imports by retailers won’t stop as there are some products which can only be obtained by going direct, or niche products which distributors choose not to carry for whatever reason. However it certainly appears that this tier of the supply chain is finally wellestablished and garnering sufficient business to ensure its long term survival and stability.

Next issue, I’ll be looking at the challenges facing bricks and mortar retailers and how they see their future. AA