Over that past few months we’ve been in the process of pivoting our service away from an ammunition subscription service and toward and ammo “banking” service. Understandably, we’ve had a few questions from customers and prospective customers…
Q1: Are you FDIC insured?
No. Since we’re not a financial institution, we’re not insured by the Federal Deposit Insurance Corporation (FDIC). This is the government corporation created in 1933 after a string of bank runs during the Great Depression. You may be surprised to hear that MOST financial assets aren’t covered by the FDIC. Including stocks, bonds, crypto, and the contents of your safe deposit box. But the whole reason for the FDIC to exist is that banks practice “fractional reserve” banking. They only keep a fraction of the depositors assets in the bank – they loan out the rest. They only need “insurance” because of this practice. Which brings us to the next question…
Q2: Do you practice fractional reserve banking? What happens if there is a bank run or shortage like we saw in 2020?
This is a more important question – probably THE most important question. The answer is unequivocally no. The proof is in the pudding. We are still around and growing after the 2020 shortage. If we HAD been practicing “fractional reserve” banking our customers would not have been able to get ammo from us, but they did. Every single customer that had ammo in their inventory was able to receive a shipment when they wanted it. This is really the whole point of our service – to have ammo available when you need it. So to follow the fractional banking model would be suicide in our industry with its frequent ammo shortages. We exist to help people weather shortages, not make them worse.
That said, we had to tell new customers during the shortage: “we don’t have a magic wand to make new ammo appear”. So if you don’t have ammo in your account (and therefore physically in our warehouse) when a shortage happens, we can’t get you more when all of our suppliers are out of stock too. That was part of the problem with people thinking we were a traditional “subscription box service” and people expect you to ship no matter what the outside conditions are like. That just isn’t reality.
We do have a protection mechanism built into our system for this scenario however: all ammo purchased by customers first goes through a “pending” status so we can confirm it is physically in our warehouse. If it is confirmed and in your asset account (aka “inventory”) then it is yours and available (as long as it is a complete box – we can’t ship partial boxes). If we don’t have it then it will stay in “pending” status until we do. During the shortage there were some less common calibers that stayed in “pending” for months until manufacturers ramped up production.
Q3: What guarantee do I have that the ammo I have purchased will be there when I want or need it?
The best guarantee we can offer is our reputation. We have been around since 2015 and we weathered the 2020 shortage because we don’t over promise and under deliver. We don’t do fractional reserve style ammo banking so baring some sort of sudden SHTF scenario or EMP attack, you’ll be able to get your ammo from us.
Q4: What about a SHTF situation? How will I get my ammo then?
If there is a sudden EMP and the grid goes down, or shipping stops and the roads are clogged with people escaping aliens or zombies… well you better have enough ammo in your house to fight them off because you won’t be getting a resupply from AmmoSquared until shipping service is restored. Sorry that is just reality. Our service is a way to stock up on ammunition the other 99.99997% of the time when aliens/zombies/the UN aren’t attacking and Fedex/UPS is still delivering.
Q5: What protections do you have in case of fire / theft?
We’re 100% covered for fire and theft by Lockton, a global insurance company based in Kansas City, MO. If, for example, we had a devastating fire we would get paid out by our insurance company and then either pay out our customers or replace what was destroyed. Theft is a similar situation, but there is little risk of a complete loss with theft since ammunition is heavy and bulky. Someone would need to back up a bunch of semi trucks and run a forklift all day and night to move all the ammo.
Q6: Is your inventory audited by a third party?
No, not yet,but that is something we are looking into. We currently do a regular internal inventory count like any other business to ensure what we have in our system matches with what is on the shelf. There are companies that will audit precious metal vaults and we hope to institute a similar process. There are a few different ways to approach the public audit and trust question, but we do plan on adding something in the future. We’re just not sure what form it will take yet.
Q7: You guys don’t have any celebrity endorsements, how can I trust you?
Well, we had Bill Cosby lined up but that didn’t work out…. so if you know anyone we’re open to introductions. 🙂
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