The $299 annual fee does give some sticker shock, but annualized that's only about $6 per week (more like $4-5 if you already have a regular Prime membership and deduct that existing cost). Especially if you're shopping for 2 or more, that comes out to a pretty small tax on your regular grocery bill.
I signed up for the free trial (because that's the only way to see what they have available for sale). Browsed the prices, immediately canceled the free trial. I wouldn't use it even if it were free, tacking on $299 to pay for overpriced groceries is a non-starter. Granted I live only a mile from a grocery store, so it's not a compelling proposition to cut grocery store trips out of my life for that price. However, the people who'd likely get the most from this service (people living in rural areas) probably aren't going to have this service available to them anytime soon, if ever.
The other group is people living in cities for whom transporting groceries home is a serious burden. That's really the only context in which this makes economic sense for both the user and the supplier.
One possible example of the target market is my grandmother, living in a third-floor apartment in Haifa. She already uses a similar service, just less convenient - she has to go the grocery store, buy her groceries and take them to the register, and then order delivery at checkout.
Another target market is your standard techie with no car (e.g. me). In that case, the choices are either a car-share (whose convenience varies with distance to a car-share lot - in my case pretty high) or lugging stuff back by hand (convenience varies both with distance to the grocery store and with the number of hills in the way - in my case, I live on top of a gigantic hill). Even so, I think this is only worth it if the subscription cost is split between 2-4 people. I don't think this is for people with a car and a parking spot, but there are a lot of people who don't, even with a high income.
When I did the free trial, the prices weren't all that bad - generally if I shopped around I could find stuff within 5-10% of Safeway prices, and sometimes cheaper, and the convenience was amazing (for example, it also replaced my pharmacy/Target runs). Note, I did find a way to browse their selection before signing up - I just had to tell them what urban area I'm in.
We use Amazon Fresh in Seattle for all of our groceries. There's no membership fee, and if they made me start paying $400/year for it, I'd never order again.
