Asda, the UK’s second largest supermarket chain, is to massively expand its etailing capacity after admitting it underestimated demand for online shopping.

The Wal-Mart-owned group wants to regain ground on arch-rival Tesco, which dominates the online grocery space.

The Sunday Telegraph reports that Asda is planning to recruit 1,800 staff and spend at least £10m on delivery trucks to support internet sales of a wide range of items.

But its chief executive Andy Bond admitted it had been caught napping by the etailing boom:

“We were slow to understand how big a market and how big a customer demand there was for dotcom.”

Next year should see a big battle between the supermarkets as their online services near full UK coverage.

By adding seven stores a month, Asda hopes all of its UK customers will have access to its online business by October 2007, up from just under 50% now.

As it doesn’t have stores in all parts of the country, this will equate to 80% national coverage. By contrast,, which is reckoned to control two thirds of UK online grocery orders, covers 95% of the UK, while third-placed Sainsbury’s covers 80%.

Tesco, which made £554m in online grocery sales in the first half of this year, is also in the process of expanding the range of products it offers online.

In September, it ramped up its web sales of non-food products through the launch of Tesco Direct, and recently announced plans to move into online clothes sales next year.

According to The Telegraph, Asda’s online service will offer food, health and beauty items, bedding, lighting, domestic appliances and electricals, but not CDs or DVDs.

It also recently announced the launch of its first affiliate marketing programme with TradeDoubler.