Online retailer Amazon, better known for selling DVDs, video games and books, has launched a grocery website in Britain.

Amazon will compete with established websites run by Tesco, Sainsbury's and Ocado. The move comes as Ocado, which has a deal to deliver for Waitrose until 2020, gears up for a float later this month.

Amazon said it is selling over 22,000 products from household brands such as Kraft, Nestle, PepsiCo, Proctor & Gamble.

The website also allows customers to save money by bulk-buying items such as nappies, washing powders, pasta, rice, herbs, cooking oils and spices.

"Amazon.co.uk's aim is to be the place where customers can find and discover any product they want to buy online, and with the introduction of this new store there are thousands of household, niche, ethnic and international grocery items, all available at the click of a button," said James Leeson, director of Grocery at Amazon.co.uk.

"With unlimited virtual shelf space, customers can choose from a wide variety of products, all of which benefit from free delivery. We will work tirelessly to increase the selection of grocery items available to be delivered directly to customers' doors."

Ocado announced yesterday that its shares will be priced at between 200p and 275p, giving the group a valuation range of £800m to £1.1bn.

However, some analysts are sceptical. Philip Dorgan, an analyst at Ambrian Partners, says that £1bn looks an "unreasonable valuation."

Related share prices
Sainsbury (J) (SBRY) share price
Tesco (TSCO) share price