I work for an Industrial Supply company and have monitored this since they bought SmallParts. Needless to say, Industrial Supply is a low margin, volume business that requires high service levels. Most Industrial Supply companies sell the same products, there really isn't a differentiator. As always in retail, price, selection and availability are crucial in making sales. This is a good match for Amazon, and obviousl…
Don't underestimate the benefit of physical presence. When I need something now , it is a huge benefit to be able to walk into Fastenal and buy it on the spot. Also, metal is heavy, again using Fastenal as an example, I can order online and pickup instore without paying shipping. Prices are higher than onlinemetals.com, or speedymetals.com but the convenience and no shipping cost often trumps that.
Amazon's targeting the customer that can forcast his needs a few days in advance, and that's a very big slice of the market.