Another issue that's not been mentioned is Google's concerns over ad revenue. Consumers are increasingly searching directly in Amazon versus in Google for product purchases, which is a significant worry to the Google ad revenue model. By participating more directly in the shopping experience Google can hope to stem some of these traffic losses. Doing it in groceries, which is such a regular purchase, they might believe they can change habits more quickly. And at least charging margins for convenience versus pure grocery retail, which as others have mentioned, are brutal.
