The discount online retailer launched by the founder of Poundland has been dealt a blow after its partner quit the project.

Poundland entrepreneur Steve Smith launched Poundshop.com in February with the strapline "Yes! Everything is still £1", selling a product mix from felt-tip pens to kitchen towels. The site was overwhelmed by traffic on its debut as shoppers flocked to what Smith described as a Poundland-style "treasure hunt-type experience".

However, Smith will now have to go it alone after Poundworld said it would withdraw from the venture. The family-run company cited "a failure to reach a shared vision" for the online store with Smith. Poundworld supplied stock and provided product images for the first ever online single price point website.

Other aspects of managing the business, from operations to customer service and marketing, were led by Smith, who claimed to have introduced the US-style single price format to the UK high street. Smith cut his teeth in market trading in the West Midlands and went on to found Poundland in 1990 – eventually selling his interest in the chain for £50m.

Poundshop.com customers must spend a minimum amount and pay a delivery charge.

Poundworld admitted that its "ongoing concerns" surrounding the operations, online trading, web platform and marketing of the site had resulted in a mutual agreement to dissolve the partnership.

Poundworld is one of the UK's leading single-price retailers. Launched in 2004 after rebranding from Everything's a £1, it has more than 200 stores nationwide and employs more than 4,000 staff. In further – and potentially confusing – fragmentation of the market, it plans to launch its own e-commerce site later in the year.

Chris Edwards Jr, trading director at Poundworld, commented: "A mutual and constructive decision has been made by both parties for Poundworld to end its association with the Poundshop.com brand. We are still committed to online and Poundworld is putting plans in place to go it alone with our own online venture. By doing so, this will enable us to have full control over all aspects of the business ensuring that the site reflects our ongoing brand values and strategy. We wish Steve every success for the future."

• This article was amended on 12 August 2014. An earlier version stated that "Poundworld is now the UK's leading single price retailer". This has been corrected.