Online purchases of consumer packaged goods from disposable diapers to processed food will more than double to $25 billion by 2014, information and measurement company Nielsen said on Monday.

Online shoppers now spend roughly $12 billion on consumer packaged goods, accounting for about 2 percent of total sales in the category, said Nielsen, which is teaming up with MyWebGrocer to start a new service that tracks U.S. online grocery sales.

"It's a very exciting time for the space. You've got Amazon crashing in on one side and Wal-Mart on the other," said Alec Newcomb, chief strategy officer at MyWebGrocer, which operates grocery shopping sites and provides services such as e-circulars.

MyWebGrocer's clients include Kroger Co, the biggest U.S. supermarket chain.

About a decade ago the online grocery business (think Webvan and HomeGrocer) spawned some of the notorious "dot bombs" of the Internet bust.

Since then, traditional supermarkets have refined online shopping services and are experimenting with delivery and pick-up options.

A new crop of competitors has also sprung up.

Online retailer Amazon.com Inc recently bought Quidsi, owner of Diapers.com and Soap.com, for $545 million. Amazon also has been expanding the number of household goods and groceries it sells, and it is testing a grocery delivery service called "Amazon Fresh" in its hometown of Seattle.

Wal-Mart Stores Inc, which already sells more groceries than any other U.S. retailer, began earlier this year to test "Walmart To Go," an online grocery delivery service, in San Jose, California.

Regional rivals include privately held FreshDirect and Dutch supermarket group Ahold's Peapod.

Nielsen said its new online sales tracking service, called Nielsen Online Basket View, will be available to consumer packaged goods makers in the third quarter.

There currently is no aggregate reporting of online supermarket sales data available in the industry.

(Editing by Andre Grenon)