In our first Surge Session, we delve into the topic of FFLs (Federal Firearms Licensed Dealers) and how online gun sellers can integrate a custom functionality as a solution to some of the problems they face. We cover everything from breaking down the fundamentals of FFLs, the obstacles online gun dealers face due to the Department of Alcohol, Tobacco, and Firearms (ATF) and FFL regulations, and how to tackle those issues and solve them using advanced functionalities for eCommerce stores.
FFL and eCommerce: What is a Federal Firearms License and How Does it Affect Online Gun Sellers?
In Part 1 of our first Surge Session, we introduce FFLs and how they affect online gun sales. We talk about the obstacles online gun dealers face due to requirements set by the ATF and the lack of accessibility and compatibility provided by the ATF FFL database. We also talk about overcoming these obstacles by optimizing a store’s purchase funnel through a custom ship to FFL functionality, resulting in more conversions and a simpler buying process.
FFL eCommerce Compliance and the ATF Federal Firearms Licensee Listings Database
During Part 2 we cover the issues both consumers and dealers face due to the lack of integration between the parties involved in the online gun selling process, from the seller, to the FFL, to the ATF itself. Consumers face the issue of having to stay updated on their respective state’s online gun laws and regulations. Online gun retailers need to deal with the lack of accessibility FFLs’ data while dealing with the regulations and requirements set forth by the ATF. We also talk about how the ATF’s failure to maintain its FFL database constantly updated negatively affects online gun dealers.
Ship to FFL Functionality for eCommerce Platforms
In Part 3 of our first Surge Session, we break down our Ship to FFL Functionality and API, which allows FFLs to upload their licenses and enables customers to select a local FFL to ship the gun they have purchased to when placing their online order. This FFL eCommerce API is aimed at online firearms dealers who are searching for an easily accessible and optimized way for their customers to locate local FFL dealers. If it wasn’t for this custom functionality, FFL dealers would have to resort to physically scanning and sending copies of their FFLs (Federal Firearms Licenses) to online gun dealers while customers would have to take it upon themselves to search for local FFLs and make sure that the FFL they have selected has their license on file with the gun vendor they are making the purchase from.
Shopify Ban on Online Gun Sales: its Effects and Implications for Online Gun Dealers
Part 4 of our first Surge Session covers the recent decision by Shopify to ban the sale of firearms on their platform as well as the effects and implications caused by this decision. We talk about how this decision may affect online gun sellers, driving them away from the platform, and therefore creating a need for online gun dealers to migrate to a different eCommerce platform such as BigCommerce. We also discuss how this may influence other online sellers to consider an eCommerce migration.
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Full Transcript
All right, guys. So this is our first Optimum7 Surge Session. We’re going to be talking about the FFL and online gun dealers and what the functionality in the industry looks like. My name is Duran Inci. I’m the COO and co-founder here at Optimum7. I’ll let you guys introduce yourselves. Go ahead, Joe.
So, what we’re going to discuss today is the FFL. Obviously there’s a lot to talk about here because we’ve been in this industry or we’ve been consulting for this industry for, I believe, about five years now. And we know a lot about regulation and compliance. We know a lot about the functionality side of things, both operational and logistics.
So, let’s have a short discussion on this and where we can take this specific functionality and everything that goes with it. How can we move it forward? How can we get more business opportunities from this?
So, we’re going to talk about the FFL’s. Obviously, when you buy a gun online, one of the dealers needs to ship it and when they ship it, they can’t ship it to your home. You can’t ship ammunition with the gun. You have to ship it to different address. And when you ship a gun or any kind of firearm gun/rifle, you need to really ship it to a dealership that’s a federal firearm licensed dealer.
Yeah, there you go. So, we call those FFL’s. Okay? Now, if you did look online, go to Google and FFL’s near me, there are certain functionalities for this. And FFL needs to be registered with the ATF and ATF has a specific database for these FFL’s, for the firearms dealers.
The logistic and operational issue is when you have a website and you’re selling these guns online, it doesn’t work like a straight forward eCommerce site. You need to have a lot of custom functionality. And we have built almost all of this custom functionality. But, do you guys, knowing what you know, Joe, do you know that, what do you think about the ATF’s database? Because as much as I know, it’s not an updated database. Right?
No, absolutely. Absolutely, it’s definitely not updated. And then, not only is it not updated, but now you’re requiring the customer to jump out of the purchase funnel to go to another website, look up the FFL, grab the FFL and then come back to complete their purchase. During that time, people change their minds all the time. So, having that functionality take place directly on your marketplace is definitely going to result in more conversions.
Let’s talk about ATF a little bit further. So, ATF’s database of approved FFL dealers, gets updated, what? Once every eight months or seven months? I would say if that. It almost seems like an annual update. So, there is no central primary database where somebody can go to see if an FFL license is valid or not? Not that I know of.
Okay. So, we’ve been talking about this probably for a few months and it’s just shocking that from a regulation or compliance standpoint, I could go online and sell guns right now and end up sending it to an FFL that’s not even active or if they don’t have a valid license, it could be expired.
Yeah, it could be an expired license and then that’s a big, big compliance issue. But, the enforcement side of things, it seems like nobody’s really enforcing this either.
You know, I’m not 100% sure what the enforcement policy is, but if you just think of the logistics of sending and paying for shipping for an item that now needs to get sent back because that dealer can’t hold on to it, it’s just a nightmare. Who’s at fault? Is it the FFL dealer or is it the store owner? Or is it the ATF because they don’t have a firm database? Yeah, it sounds like it’s just going to be people pointing fingers at the next person.
Yeah, so we’ll talk more about this functionality but I want to ask Tom first. What has really gotten your attention while you’re doing the research about the gun industry online? What have you seen in terms of what people do?
Well, what leaps out immediately is that people, when they’re looking to buy guns online, there’s a massive difference from state to state as far as regulation goes and that puts customers under all sorts of different obligations because they’re in a position where they’re ultimately the one responsible for the gun they’re going to purchase. So, if you’re in California, you have to know whether or not you can order ammunition online, whether or not you can have an automatic or semi-automatic delivered and all of those different things.
So, as far as the content goes, to answer your question, a lot of it is oriented around different states- helping people find the resource that’s for them based on where they’re searching and outlining different things they need to be aware of. And in a larger sense, helping an online dealer become a one-stop resource for all of this information, emphasizing the importance of knowing it and making that process as streamlined for the customer as possible. So that- like Joe said earlier- they don’t jump out of the funnel at one point.
Yeah. So, it seems like, and again, when we get a prospect or a client here at Optimum7, we try to consult them as efficiently as possible. When we’re dealing with one or two arms dealers as clients or online gun sellers or online firearm sellers. We would love to just do marketing or functionality and have it be at that. But we’re dealing with, we had the same issue with the finance sector. We are dealing with compliance, regulation, limitations with the way things are, with what we’re dealing with the ATF database and the client is basically creating processes where they can now store all this information. I know for a fact that one of our clients needs to store this for ten years, every single gun he releases. He needs to store it for ten years. It’s not a digital system. It’s not a cloud-based system. It’s literally you’re making somebody sign and you’ve got to hold onto that paper for ten years. It’s not efficient at all.
How do you think this could be more efficient? What’s the ideal structure? We’ve built a lot of functionality but our stuff is kind of like patching here and there. It works. It works beautifully. But can you think of a centralized system that will address all of that? Or do you think this has to be a governmental organization? Does it have to be ATF that takes care of this and takes the lead on this?
I definitely think the ATF is the one that needs to take the lead on this. I think any other third party trying to come up with a solution is going to run into the same red tape that we face when it comes to marketing and now, even when it comes to the eCommerce aspect of it. So, I think the ATF themselves need to find a more efficient solution that then can be integrated into any of these functionalities that we create, to kind of streamline and make these dealers’ lives easier.
So, I think the issue is that the FFL dealer is, for the most part, if they’re a dealer and they’re up and running, they have an FFL. There’s no way they can sell firearms without it. The issue is that the online retailers don’t have a way of getting the most up to date license that these dealers have. And it’s not like these dealers are going out of their way to say, “Hey, here’s my most up to date license. Make sure that this is the one that you have on your site so that consumers can attach it to their order”.
That’s the problem. There’s no communication between the dealers and the online retailers when their license is updated. So, that’s kind of where, how can we have an automated system that as soon as a dealer updates their FFL either the retailer gets notified or it automatically gets filed into the database that a consumer can find, click and attach to their order.
Let’s talk about the actual functionality because I think a lot of the people who are going to watch this video or listen to this audio are interested in this. And this mainly addresses the people or businesses that sell guns online or any type of firearms or any type of product that needs to go through some level of compliance or some level of checklists.
So, when we look at this specific product here, what we’re looking at is, again the product page, this is a handgun by Smith and Wesson. Now, I add it to cart and I just go to checkout here. And you will see that on the right we have the FFL functionality. And the FFL functionality allows the user to be able to find the closest dealer that is on file. So, if I go here and I put in my zip code and then I hit search, you will see everybody that is close to me that I can have this gun shipped to but I have no license and on file ones.
Now, if you select one. If the user selects one, that does not have a license then the system will automatically email or contact that dealer and ask for them to upload their license. And we have the contact information on the back end from the ATF database. Now, obviously most people will select something on file and they can pick it up. Let’s say they want to pick it up from here. Once I click this, it automatically selects that. And if I want, I can change that selection and then it forces the shipping to be that address. And the reason that we do that is because we have to ship to the dealer and it has to force. It can never, you see you cannot really edit these fields. You cannot type anything into these fields. It needs to be forced and then the user basically continues and checks out.
Now, this functionality seems very straightforward and basic, but there’s a whole back end that handles all the FFL’s that are on file, that are not on file. It handles the FFL’s by proximity, so there’s a functionality there and a bunch of other stuff in the background that enables this specific business to sell guns online and to make this process a little bit more efficient. So, this is the most important aspect of shipping guns, selling guns online and shipping guns online.
So, this is how the functionality works. What it enables you to do is enables you or the end user to be able to go through one checkout funnel, define the FFL that they are going to, find the active FFL that’s on file that they want the gun to be shipped and it makes it very, very straightforward and efficient for the gun seller or the gun dealer to ship the item and their operational structure so that they don’t have to do a lot of manual work, call the user, where do you want the gun shipped, etc.
Now, what we are doing at Optimum7 as you guys know, we’re building an FFL API that’s going to integrate with the AFT and we’re going to fix most of these structural issues with our API. That should be coming out in the next 30 days or so.
But I know, Joe, that you want to talk about something very, very specific and painful. Go ahead. Absolutely. So, now that Shopify has joined Amazon, Facebook and some of these other retailers – Google. They’re joining the band on the sell of online firearms, this is going to effect a lot of business owners.
So, you can’t open a Shopify store now and sell firearms. Correct?
No. So, they have banned, so how many firearm dealers do you know only sell a few types of guns? No. They sell all types. So, by Shopify banning the sell of semi-automatic firearms, that’s going to hurt every single online firearm dealer that’s using the Shopify platform. So, what does this mean for them? How are they going to now take their operation elsewhere? They’re going to have to migrate their entire site, all of their data, all of their inventory, all of their product data, order history, because like you said, these individuals need to have all of their history of each and every sale that they’ve done online. So, everything’s going to have to be migrated over.
Where do you think these Shopify people will go and where can they go?
It really depends. It depends on the size of their operation. It depends on, what’s their annual revenue? If they’re two million annual revenue, I mean I think an easy transition for them would easily be BigCommerce. But I would say, once they’re pushing that five to ten million dollar range, I think a lot of these dealers are going to look for a custom solution. They’re going to look more for an enterprise level platform. They’re going to look into Oracle. They’re going to look into SAP, Vtex.
Yeah, so I think to be honest, it’s not just going to affect Shopify from the firearm dealer standpoint, I think it’s going to affect them from any online retailer that they have right now that’s conservative. I think they’re going to see this and almost take offense to it and immediately start to look for another solution.
As we have more updates and news about the gun industry and how this is shaping up, we’ll give more updates.
