It's a little like pets.com, I think. A website to sell dogfood is not a fundamentally unreasonable business to run.
The problem comes when you start buying superbowl ads for your dogfood-selling website before you are turning a profit.
Safeway has been delivering since at least the first dot-com, and they are doing okay.
Amazon is approaching this point, but unlike Safeway, they don't come by with a refrigerated truck, so I can't get my produce through them. I would watch them, though; If anyone is going to become the giant in this space, it's amazon.
As a Safeway delivery customer? the majority of the value I see isn't in driving the food the mile or so it is to my house, but in letting me choose what I want on a website, rather than making me wander through an ever-changing labyrinth looking for what I want.
Amazon is really, really good at that sort of thing. The only thing they need, really, is a contract with a delivery company that runs refrigerated trucks.
I don't think grocery delivery is a suicide mission, even same-day grocery delivery; certainly not if you look at delivery as part of your retail operations.