After delivering first £1 billion of sales, food delivery service Ocado has expansion plans on the cards to combat new competition from one of its shareholders.

The home-shopping service has outlined ambitions to expand into areas such as clothing and health and beauty, as Waitrose rolls out its own delivery service, Waitrose Deliver.

Ocado has revealed that its relationship with Waitrose, its largest shareholder via the John Lewis Partnership having a 28 per cent stake, is not as straightforward as it would appear. Ocado’s decision to cut the price of some branded goods to less than they cost at Waitrose has created disharmony, as has Waitrose’s introduction of Waitrose Deliver. The online venture that delivers Waitrose shopping has also started price-matching Tesco on most branded goods. Ocado’s head of finance and marketing, Jason Gissing, has said that Waitrose “does not speak with one voice”.

According to Gissing, Waitrose has been leafleting consumers in St Albans, just a few miles from Ocado’s Hatfield headquarters, urging them to try Waitrose Deliver and highlighting items it can offer that are not available through Ocado.

Gissing said: “It is irritating. Does it make sense? Not to me. If we were working with a different retailer, would we have that problem? Probably not, but it is because of the partnership structure.” While a spokeswoman for Waitrose said the grocer was not breaking any agreements.

Ocado, whose shareholders also include UBS, Goldman Sachs and the Rausing family, operates from its Hatfield centre, but has plans to move further afield.

“We are starting to think about other things people might buy,” said Gissing. “If we can get a Jerusalem artichoke to someone in good condition, then pharmaceuticals or health and beauty products or iPods should be really easy. Over time we will diversify. Then we could take this platform to other countries.”

Gissing believes that Ocado will really benefit when the “MySpace generation” grow up. By then, he forecast, online shopping could reach 30 per cent of the market - more than £35bn at today’s prices. “This business is the future. It is recession-proof. It works and it is green. It is an extraordinary thing.”

Topics