I have confirmed with the Seattle Branch ATF office, (I can confirm the Agents Name if needed)
That NO Internet Sales only applications will be approved. (they will most likely do an interview with you, and then deny you based on that alone)
I was give that answer when I wanted to move business locations to an area that didn't allow retail sales. (technically they did allow 6 per day, but ATF didn't allow the number, so they called city planning and told them to NOT allow my business license at that location.)
When inquiring about Dealer to Dealer sales only, and Shipping from the location instead of doing Retail Sales, I was told that "A customer MUST be able to walk in and do a transfer during your stated business hours."
I might have been given conflicting information, as is common with the ATF, and I do feel they were looking for reasons to deny my application change.
Essentially, avoid the hassle, Cover you bases, and find a suitable location to handle the transfers in a correctly zoned area.