I do a mix of online and LHBS purchasing for my supplies. IF I could get everything from the LHBS that I wanted, at rates close enough to what it would be delivered from the online vendors, then I'd shop 100% at the LHBS. Often enough, though, the LHBS won't have everything you want, and they're not always able to order things that I do want. Or they would need to order a full pallet of something that I want just a few of, making it not viable for them to do so.
I think that if you were to have a wide enough selection, and be able to order up additional items fast enough, then people would use you for most things. You'll never be able to carry everything people want, but you should be able to stock enough.
If you posted when you placed special orders, like once a week, then I think people would plan to place those orders knowing that they'll get those items with the next delivery. I don't think you need to have a warehouse sized place in order to do well. Start of with a smallish place, with room to expand. Or, start off with a modest inventory, but post up about being able to order pretty much anything people want. Once you see the trends for the area, you can stock more items that actually move at a decent rate. Of course, chances are you'll always move the basics... If you can beat, or at least come within a small percentage, of the online stores pricing, then I think you'll do well.
I know from experience that with most distributors, until you do a significant volume with them, you won't get the really good prices. It sucks for someone just starting out and trying to compete with the places that have been around for several years.
You might want to offer a place for people to brew as well. Especially for those that want to, but they cannot get a full batch boil on their stove.
For your web site, you could put up some video's showing people the different options available to them (for brewing) or at least links to sites that already have it posted... Different all grain methods, extract batches, partial mashes, etc. Depending on how much time, energy, and effort you can devote to this, you could see it take off like mad...