This may indicate a failure. What killed Webvan was low market penetration. They had 3% of the market in 30 markets, and needed 30% of the market in 3 markets. With low market penetration, deliveries are too far apart and there are too few deliveries per truck per hour. Amazon could succeed where Webvan failed only if they achieved a high percentage of potential customers. They'd like the truck to stop at every house. To get there, they had to offer cheap/free delivery at a loss, trying for market saturation.

At $299 per year, that may mean Amazon is giving up on Fresh as a high volume service with high market penetration, and repositioning it as a luxury service with few customers.