Maintaining a unique, profitable product line is really hard. Pricing those products, managing an eCommerce store, and dealing with administrative tasks like shipping or website hosting can add to the burden of many entrepreneurs, which is why eCommerce marketplaces have become so popular.
Merchants can sell via Amazon, Etsy, Shapeways, and other marketplaces to avoid the hassle of creating their own store. For example, if you’re an EU merchant, the new VAT regulations that were imposed on January 1st may have made it difficult for you to sell digital products, as the administrative burden of doing so significantly increased. You may have been looking for such a marketplace to sell in wink .
Managing a marketplace can be a great way to start an eCommerce business without the need to create your own product line — instead, you can manage the site and sales community. Merchants benefit from a reduced administrative burden and the traffic or audience that comes with a marketplace, and in return the marketplace takes a commission for each product sold to cover the costs of that administration (such as time, shipping costs if you’ll ship products, etc). While managing a marketplace requires the level of dedication of running your own store (and can very well take more!), it can provide a source of revenue that doesn’t require the up-front investment in products.
If you already manage your own store and have a thriving community, it can also be a way to diversify your revenue, as you can invite other merchants to sell via your site. This provides a commission for you in exchange for administration, which you’re probably already doing anyway if you’re running your own store.
You’ll need to decide how much administration you’ll take on: will you just manage incoming orders? Will you handle customer pre-sales questions or issues? Will you ship products or simply forward orders to the vendor? Adjust the commission accordingly to account for the administration you’ll take on.
If you’re only planning to allow digital goods in your marketplace, then you should also check out our article on creating a marketplace with Easy Digital Downloads, as it provides another great option for creating vendors and tracking commissions.
If you’re creating a marketplace to sell shippable goods, then WooCommerce in conjunction with the WooCommerce Product Vendors extension could be the solution you’re looking for. We’ll walk through how to create a marketplace with WooCommerce using this extension, and what marketplace owners and vendors can do in this setup.
Creating your marketplace with WooCommerce will require the $79 Product Vendors extension, but any other setup costs will be optional. Product Vendors will cover adding vendor information and tracking commissions.
If you sell your own products, you can allow vendor products to be displayed alongside of them within your catalog, or you can hide vendor products and manually display them elsewhere. You’ll also determine the base commission rate for your marketplace — how much do vendors make from each sale? This can be overridden for a particular vendor or for a product as well.
Once you’ve determined your basic configuration, you can add vendors. Vendor products can be managed exclusively by shop administrators and managers, or vendors can be given the ability to manage their own products. If the vendor admin is set, then that user will be able to log into the site and manage his/her products (but not others). If not, only the shop employees can manage products.
Making a user a vendor admin will give them some additional capabilities that will let them manage their own products and submit them to you for approval (or publish them if you’ve allowed this).
When vendors have been created, they’ll be able to add their own products, or you can manually assign vendors to a particular product. This can be done while editing a product by checking one or more vendors for a product.
If more than one vendor is selected, then the commission will be split evenly, though you may want to adjust the per-product commission rate. For example, if vendors typically get 40% commission, but there are two vendors for a product, you may want to change the rate to 20% each.
If you’ve set a user as a vendor admin, they’ll be able to manage any products associated with them, or any product they add. They’ll see a pared-down version of your shop’s admin dashboard to edit and add their own products.
If you require approval, vendors won’t be able to publish products. Instead, they can submit them for approval:
Vendors also can’t assign other vendors to the product, nor can they adjust commission rates for a product. They’ll have access to the information needed to manage the product and that’s it.
Once a vendor submits a product, you’ll be able to see it in “pending” status, and can then choose to edit or publish it as needed.
If you don’t want to allow vendors to edit their own products, you could require them to submit products via a form. We have a tutorial on doing so with Formidable Pro and WooCommerce.
You can display vendor products alongside with the rest of your catalog if desired. For any product that has a vendor associated with it, the vendor information will be displayed in a product tab (and could optionally be show with a widget instead or in addition to this).
Customers can also view all products by a vendor by visiting the vendor page:
If a product has multiple vendors, then each vendor’s information will be displayed to the customer on the product page.
Other than the vendor information, customers won’t see any other inner-workings of your marketplace, as the rest of the commissions process takes place behind the scenes.
When vendors sell a product, they won’t be assigned a commission until the order is completed. Once the order reaches this status, commissions will be assigned using the vendor’s rate (or your default if not set). If a product rate was set, it will override this.
All commissions that have been generated will be visible in the new “Commissions” menu. You can view commissions, edit them, or manually add new ones. The commission will also link to the appropriate order so you can view full purchasing information for that commission.
Product Vendors includes reports as well so you can get an overall view of vendor sales and commissions. These reports will show a graph of vendor sales and commissions, as well as earnings per month by vendor.
Vendors won’t have access to any of their commission information, including these reports, unless you choose to share it. You can do so using a couple of shortcodes to optionally display commissions to vendors. These shortcodes will display nothing unless the logged in user is a vendor. If so, the user can see month-to-date sales totals or a complete earnings table:
Paying vendors will be up to you. The easiest way to do so is via PayPal, as you can export all commissions to a CSV then upload them to PayPal Mass Payments.
Commissions will typically have an “Unpaid” status. Once you’ve exported commissions to a CSV and paid them out, you can then mark all commissions as “paid” with a bulk action.
Depending on the products in your marketplace, you may want to delay commission payments in case of returns. Many marketplaces hold commissions for a month and then pay them out monthly to account for refunds or returns.
That covers most of marketplace creation and management. While Product Vendors provides a simple, all-in-one solution for setting up your marketplace and commissions, there are upsides and downsides to using it.
|Vendors can manage own products||No automatic vendor payment|
|Commissions can be exported / status bulk-changed||No default page to display all vendors|
|Adds a “Vendor” tab and info to products||No vendor application|
|Can assign multiple vendors||Vendor earnings not automatically displayed (needs shortcode)|
You could have vendors register for an account using your WooCommerce customer registration form (typically on the Checkout and My Account pages). Vendors could then get in touch with you to ‘upgrade’ to a vendor account via another form on your site. However, I wasn’t a fan of this and would prefer a “Vendor” application form instead.
You can use any form generator to gather more information about your vendors in your application, and you’d then manually create users. However, I created users automatically with my form builder instead to cut out a step — the way I did this in my test shop was to use Gravity Forms (developer license needed) + the User Registration Add-on (hence the developer license).
I created a customized “Vendor Application” form that created a new user account (with a role of “customer”) when the application was submitted. This let me review the information I wanted, such as why the vendor is a good fit for the marketplace, and creates a user so the vendor doesn’t need a customer account. You can delete the user if you reject the application, or you can edit the user and set him/her as a vendor admin when you approve the vendor.
This certainly isn’t a necessary step, but if you want an “Application” process that can help to automate things a bit, this is one option. Without it, you’ll simply have to manually add user accounts for vendors and assign them as admins, or require a customer account to be created, then upgrade it.
Here’s a sample form you can download from Dropbox (and import to Gravity Forms) and the setup I had in the User Registration Add-on to get you started if you choose to go this route:
You can create you own eCommerce marketplace using WooCommerce and the Product Vendors extension. While it may not have all of the features on my wishlist, it does provide a complete solution for adding and managing vendors, allowing vendors to manage their own products, and tracking commissions for vendors. My favorite feature is that vendor admins can manage and add their own products, which reduces the amount of management you need to do, and lets vendors take control of their products.
Regardless of whether you’re simply managing a marketplace or allowing vendors to sell products alongside of your own, Product Vendors will support your setup to help you create your marketplace with WooCommerce.
- The plugin documentation contains a lot of help with setup.
- Product Vendors plays nicely with other plugins, such as Bookings.
- It’s also integrated with Product Enquiry and the Order CSV Export plugin (Default: One product per Row format).
- If you want a frontend form for vendors to submit products instead, check out our tutorial on creating products via Formidable Pro forms.