Lower prices, lack of brand names. Think AmazonBasics, but for food. I wouldn't buy anything important off AmazonBasics, but for cables, shower speakers, and other minor things it's Good Enough.
If you had to choose between perfect, high quality produce and staples you drive to a physical store for, or decent (but not perfect) produce you can have delivered at the same (or lower) cost, which would you pick?
They're going to automate as much as possible with the goal of reducing costs, use the stores as a base for the Amazon Fresh delivery business, expand prime fresh and reduce product selection at the stores. I suspect the stores will become a base for Blue Apron like ready to make food deliveries.
There are tons of grocery delivery services around where I live, none of which I use. We still go to the Whole Foods because we like to wander around tasting the free samples, being able to pick the produce items we want, maybe having lunch at the prepared food section, etc. That's a big part of the appeal.
I assumed the same, then actually bought something off Amazon basics. I can't speak for everything, but man was it low quality. It's like they were aiming for just barely above the bar. Simple things like sheets and blankets. So cheaply made.