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CORRESP
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June 1,
2005

VIA EDGAR

Mr. John Cash

Accounting Branch Chief

U.S. Securities
and Exchange Commission

Washington, DC  20549-0510

Re:          Strategic Distribution, Inc.

Form 10-K for the fiscal year ended December 31,
2004

(File No. 0-5228)

Dear Mr. Cash:

This letter will serve as
a response to each of your comments regarding the above-referenced Annual
Report on Form 10-K of Strategic Distribution, Inc. (the “Company”)
contained in your letter dated May 4, 2005.  In order to facilitate your review, we have included
the Staff’s comment followed by our response below.

Management’s
Discussion and Analysis – Liquidity and Capital Resources

1.     Tell us
supplementally and revise future filings to address the reason(s) accounts
receivables increased by $7.6 million as of December 31, 2004.  Your discussion should be made in light of
the fact that your 2004 revenues decreased 9.5% from 2003 revenues.

Response:

The Company would like to
advise the Staff supplementally that the accounts receivable balance increased
$7.8 million from $11.8 million at December 31, 2003 to $19.6 million at December 31,
2004, and that the increase was primarily attributable to a temporary increase
in the accounts receivable balance with respect to one of the Company’s new
customers.  A substantial portion of the
increase in the accounts receivable balance was collected in the first quarter
of fiscal 2005, resulting in a decline in the Company’s accounts receivable
balance to $15.1 million at March 31, 2005.

All of the future
periodic reports to be filed with the Securities and Exchange Commission (“SEC”)
that require Management’s Discussion and Analysis will address the reasons for
similar increases in accounts receivable.

Item 9A.  Controls and Procedures

2.     You indicate “…the
company’s disclosure controls and procedures are effective in alerting them on
a timely basis to material information related to the Company, including its
consolidated subsidiaries, that is required to be included in reports filed or
submitted under the Exchange Act.”  In
future filings, please revise your disclosure to clarify, if true, that your
officers concluded that your disclosure controls and procedures are effective
to ensure that information required to be disclosed by you in the reports that
you file or submit under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rules and
forms and to ensure that information required to be disclosed by an issuer in
the reports that it files or submits under the Exchange Act is accumulated and
communicated to your management, including its principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.  Otherwise, please simply conclude that your
disclosure controls and procedures are effective or ineffective, whichever the
case may be.

Response:

Item 9A of the Company’s next annual report on Form 10-K
and Item 4 in the Company’speriodic reports on Form 10-Q (including
the Form 10-Q filed with the SEC for the period ended March 31,
2005) will include the following disclosure (to the extent the disclosure
controls and procedures are effective during the applicable reporting period):

The Company maintains a system of disclosure controls
and procedures designed to provide reasonable assurance that information
required to be disclosed in the Company’s reports filed or submitted pursuant
to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the Securities and Exchange
Commission.  Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that such information is
accumulated and communicated to the Company’s management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.  The Company carried out an evaluation,
under the supervision and with the participation of management, including the
Chief Executive Officer and Chief Financial Officer, of the design and
operation of the Company’s disclosure controls and procedures as of the end of
the period covered by this report.  Based on this evaluation, the Company’s
Chief Executive Officer and Chief Financial Officer concluded that the Company’s
disclosure controls and procedures were effective at (date).

Note 2 – Significant Accounting Policies – Revenue
Recognition

3.     We note from
your description of business that you provide supply chain management services
with respect to maintenance, repair and operating (MRO) supplies.  We also note that you sell MRO supplies.  Provide for us supplementally the terms of your
most representative sales agreements.
Address whether these agreements are revenue arrangements with multiple
elements as contemplated in EITF 00-21.
If so, address the accounting and disclosure requirements of EITF 00-21.

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Response:

The Company would like to advise the Staff supplementally that it provides
supply chain management services (“Services”) with respect to maintenance,
repair and operating (“MRO”) supplies and sells MRO products. The Company
typically enters into agreements with customers to provide Services and sell
products. The aforementioned agreements are considered agreements with multiple
deliverables under EITF No. 00-21, “Revenue Arrangements with
Multiple Deliverables.”  The Company’s sales
agreements are typically 2 to 3 year arrangements that include a monthly
Services fee based on the number of people and the related payroll cost
associated with the on-site management and a normal margin for their
services.  Pricing for product sales is
based on the fair market value of the items ordered as published in an on-line
catalog.

The Company’s arrangements typically include a Services and a product sales
component, which are separately stated in the agreements. The Services
component has a standalone value to the customer, which is supported by the
fact that the component is sold separately by other vendors. Additionally,
amounts allocated to the Services component represent fair value based on the
Company’s history of performing similar services for comparable customers.
Product sales have a value on a standalone basis as these products are sold
separately by other vendors and the customer could resell the delivered
products on a standalone basis. Although the Company’s arrangements include a
commitment to supply an indeterminate number of units of product, such products
are sold at pricing at least equal to fair market value. In future filings we
will include the following disclosure in Note 2:

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement
exists, products are delivered or services are provided to customers, selling
prices are fixed or determinable and collection is reasonably assured.  The Company provides supply chain management
services (“Services”) with respect to maintenance, repair and operating (“MRO”)
supplies and sells MRO products. The Company typically enters into agreements
with customers to provide Services and sell products. The deliverables within
these agreements are separable into units of accounting and are evaluated under
EITF No. 00-21, “Revenue Arrangements with Multiple Deliverables”
and are accounted for under SAB No. 104 as noted above.

4.     If revenues from
services are more than 10% of total revenues, separately present those revenues
and the related cost of services in the statement of operations in accordance
with Rule 5-03(1) of Regulation S-X.

Response:

Rule 5-03(1) of Regulation S-X is not applicable
because the Company’s revenues from Services were less than 10% of total
revenues for each of fiscal 2004, 2003 and 2002. Therefore, the Company is not
required to separately present the revenues and costs generated from providing
Services.

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5.     To the extent
the gross profit margins vary between product and services, revise MD&A to
disclose and discuss changes in sales of products and sales of services and the
impact of those changes on gross profit margins and income from operations.

Response:

As noted above, the Company’s revenues from Services have historically
been less than 10% of total revenues.  Accordingly, the Company has not
separately disclosed and discussed in MD&A changes in sales of products and
sales of Services in accordance with Rule 5-03(1).  In
addition, the Company has generally not disclosed the impact of any varying
profit margins between products and services as they have not had a material
impact on gross profit margins or income from operations due to Services being
a small portion of total revenues.  In
connection with this response to your comments, the Company acknowledges that:

•      the
Company is responsible for the adequacy and accuracy of the disclosure in its
filings;

•      staff
comments or changes to disclosure in response to staff comments do not
foreclose the SEC from taking any action with respect to the filing; and

•      the
Company may not assert staff comments as a defense in any proceeding initiated
by the SEC or any person under the federal securities laws of the United
States.

Naturally, if you or any
other member of the Staff has any questions or would like to discuss these
matters at greater length, please do not hesitate to contact me at (215) 633-1952
or, in my absence, Philip Flynt, Chief Financial Officer at (215) 633-1907.

  Respectively
  submitted,

  /s/ Daniel
  Kearney

  Daniel Kearney,
  General Counsel

cc:           Philip
Flynt, Chief Financial Officer

Bret
Johnson, Staff Accountant

Jeanne
Baker, Assistant Chief Accountant

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