Two hour delivery is expensive, and online stores are much harder to search and navigate than well-stocked brick&mortar (it's not impossible to do, but nobody does it).

In the end the cost for the person to pick up and deliver an item on demand like that goes somewhere and that in particular is something that doesn't scale away. The margin improvement from having a warehouse instead of a box store won't make up for that last mile delivery charge, especially when the box store can do the same kind of delivery and benefit from impulse or high margin items from in person shoppers.

Amazon is like wading through sewage to find what you want, and rarely if ever do you find something you weren't already explicitly looking for.