They are offering same day delivery in some markets today, including Las Vegas. I've used it twice, with the $10 same day delivery being less expensive than other expedited shipping options. It was very cool having a courier drop a package at my door with my purchase the same day I bought it. Even with $10 delivery the final price was cheaper than buying from a retail store at retail prices.

I think with these test markets, Amazon has proven to themselves already that the idea works. I know that I'm very happy with the results so far!

They've been working on making the idea work in Seattle for years now. It has been fascinating to watch the many different iterations and experimentations. To say that they're just building warehouses isn't even close to correct, they are proving their business model, startup-style.

According to wikipedia, Amazon has been operating Amazon Fresh since 2007 (the article draws a direct comparison: "It is reviving the business model of ordering groceries online for home delivery first popularized by such companies as HomeGrocer.com and Webvan in the late '90s.") and seems to now own Webvan.

I'll leave analysis up to somebody else, but I find this interesting.

http://en.wikipedia.org/wiki/AmazonFresh

http://en.wikipedia.org/wiki/Webvan

I disagree here. Amazon has clearly proven the market with their Amazon Prime membership; Amazon has massive mind share (I don't even know what Webvan is/was); Amazon will also only improve operating efficiency by building these warehouses with the automated inventory fulfillment system (which has the nice side-effect of making customers really happy) which over a long period of time will pay for itself (not discounting the happy customers buying more and more products through Amazon).

They've had same day delivery (local delivery) for quite a few product categories in the Seattle area for some time with Amazon Fresh trucks. I've bought a book recently with same day shipping for an additional 3.99 (Prime) that was on my door step when I arrived at home.

http://www.amazon.com/gp/help/customer/display.html?nodeId=2...

Webvan massively overbuilt/overspent in a fairly typical dot com era story of losing massive amounts of money to try to own a new category. Peapod leverages physical grocery businesses through partnerships. It's much less ambitious in a lot of ways. The fact is that grocery delivery has been available in urban cores forever. Peapod just expands on that a bit, adds online ordering, and treats it as a premium service (ie. you pay for delivery).