You'd think, but you'd often be wrong. If you're a small retailer, even with the "wholesale discount" ordering from the major US wholesalers, you'll still be undercut by Amazon fairly often. You don't get the equivalent discounts until you're ordering tens of thousands per order from individual suppliers, if ever. That means you're not just a busy store but a busy chain of stores.

My parents own a health food store. They pick up a few of the products they carry whenever they're at Wal-Mart, because Wal-Mart's retail is below the manufacturer's wholesale rate for them. Obviously they don't make much margin on those things, but their customers want them to carry them anyway.

Amazon is fine with acting as a supplier for other stores. They will take sales tax exemption forms for reselling their items.

Maybe, but a common API that can order millions of different products with reliable delivery/billing/returns seems like it would be very useful. Dealing with middleman distributors (who often want you to fax orders in) is a nightmare for many businesses.

Amazon offers better prices than many wholesalers, and much better service than most, in that lead times are shorter and more predictable. If you guarantee your customers you can always install 10 widgets, and you keep 30 in stock, what happens the day after you install 10 widgets for three different customers? With this sort of setup, you receive another 30 widgets by FedEx. Let Amazon do the floor-planning, and spend those resources on something else.

Of course, there's little to prevent this service from signing up big wholesalers as well, if they're able to meet its service requirements.