Can someone explain how the economics of scaling this type of business works now in 2012 when it failed in 2001? (most famously, Kozmo). I thought the problem

Can someone explain how the economics of scaling this type of business works now in 2012 when it failed in 2001? (most famously, Kozmo). I thought the problem was that the all-in cost of delivery was greater than the flat delivery fee added to each purchase. What's the trick to make this type of business work now?