I've been a customer at Amazon.com for 10 years. Besides books, I've bought electronic accessories, DVDs, and software. I've recently been ordering fresh food from Amazon Fresh now available in my area. Since it is not available everywhere yet, I thought I would write out my views.
I was an early enthusiast of Homegrocer.com. Their well known failure as a company included building huge, automated warehouses and making deliveries with refrigerated semi-trucks to individual households. Irrational exuberance. Their downfall was also caused by the fact that their prices were higher than a typical grocery store because they couldn't get groceries from distributors at the same low prices as supermarket chains that were ordering huge quantities.
But the concept of ordering over the Internet and having it delivered to your door is still a viable model for a business, even for something we like to select individually, such as fresh produce. Think of the time it takes to go to the store, gather your items, and go through the checkout process, and then schlep (haul) your food home.
There are a couple of gotchas about grocery deliveries: they have to keep refrigerated stuff cold and frozen stuff frozen, and Amazon does that with little frozen packets like blue ice for the cold stuff and dry ice in Styrofoam packing for the frozen stuff.
The key for me is their flexible delivery times. You can select to have your order delivery before dawn or from 9 a.m. to noon or from 3 p.m. to 6 p.m. or 6 p.m. to 9 p.m. and unlike Safeway.com, you can indicate when you select the delivery time not to be disturbed and they will leave it at your door. And a nice thing that they've thought of is that each plastic bin is secured with a little plastic tie that must be cut with scissors or a pocketknife so that creatures or curious passersby or the wind won't open them.
There is not much of a markup in groceries, and I don't think they can make much of a profit when you consider the added cost for sending out refrigerated or frozen items, but if people tend to add gourmet or specialty or already-cooked items to an order or if they scale up to a significant number of customers in an area, this could be a good long-term business for Amazon. I wish them the best.