The Sears & Roebuck catalog was sent to rural farmers who had limited access to durable goods. It does seem to me counterproductive that Amazon tested this in cities that already have easy access to grocery markets.

$299/yr is $5.75 per delivery if you order something every week. But $25 if you only buy once a month. For the service to be worthwhile they need to sell to areas that need better access to fresh foods. There's a name for that, food deserts. And Los Angeles, Seattle, and New York are not on that list. Maybe if they had tested in a place like Phoenix they would have seen much higher use and could justify a lower subscription rate with delivery charge.

http://apps.ams.usda.gov/fooddeserts/foodDeserts.aspx