- Extend a store platform when the marketplace works like a shop with several suppliers; build custom when the marketplace logic is the product.
- Decide how money moves first: you collect and pay vendors later, or a payments platform splits each payment at checkout.
- Stripe Connect offers direct charges, destination charges, and separate charges and transfers for different marketplace models.
- With destination charges and separate charges and transfers, refunds and chargebacks are debited from your platform balance first.
- WooCommerce's Product Vendors extension covers vendor applications, commissions and scheduled payouts with a single checkout.
Should you build a multi-vendor marketplace from scratch or extend an existing platform?
Extend an existing platform when your marketplace works like a shop with several suppliers: vendors list products, buyers use one checkout, you take a commission and pay vendors on a schedule. Build custom when the marketplace itself is the product, with its own matching, booking, pricing or payout rules. Either way, the hard parts are the same: vendor onboarding, commissions, payouts, refunds and disputes. Plan those first and the platform choice usually becomes clear.
Our custom software and ecommerce development teams work on both kinds of project, and the decision nearly always comes down to how money moves.
How should money move between buyers, vendors and you?
Decide this first, because it shapes your legal setup, your tools and your risk. There are two broad models:
- You collect, then pay vendors. The buyer pays your store, you keep a commission and send vendors their share later. It is simple to start, but you hold other people's money and handle every refund.
- The payment is split through a payments platform. Each vendor has an account in their own name, the provider routes their share to it, and your fee goes to you.
Stripe Connect is a common choice for the second model. Its guide to Connect charge types describes three options:
| Charge type | Who the buyer pays | Typical use |
|---|---|---|
| Direct charges | The vendor's account; buyers may not know your platform exists | Platforms where each seller trades on their own, such as store builders |
| Destination charges | Your platform, which passes funds to one vendor | Service marketplaces with one provider per order |
| Separate charges and transfers | Your platform, which transfers funds to one or more vendors | A single cart with products from several sellers |
Stripe notes that separate charges and transfers need a more complex integration, so use them only when an order really involves several vendors or the vendor is not known at the time of payment.
Who pays for refunds and chargebacks?
This catches many founders out. Stripe's charge types guide says that with destination charges and with separate charges and transfers, refunds and chargebacks are debited from your platform's balance, and you can then reverse transfers to recover the money from the vendor. With direct charges, they reduce the connected account's balance instead. So in most marketplace setups, you carry the risk first and recover it from vendors afterwards.
Write the rules into your vendor terms before launch: return windows, who pays return shipping, how long you hold a vendor's funds before payout, and what happens when a vendor's balance cannot cover a refund.
Payout timing is part of the same decision. Paying vendors after delivery, or after the return window closes, lowers your refund risk. Vendors will prefer faster payouts, so many marketplaces start cautious and shorten the wait for vendors with a good record.
What does vendor onboarding involve?
Vendors must be verified before they are paid. Stripe's overview of how Connect works explains that you can onboard and verify sellers with Stripe-hosted flows or build your own with its API. Hosted onboarding is usually the right start, because identity documents then stay out of your own database. If you read older tutorials, note that Stripe's connected account types page now marks the Standard, Express and Custom account types as a deprecated feature for new platforms and recommends controller properties instead.
Beyond payments, plan the marketplace side of onboarding:
- an application form and an approval step;
- a vendor profile, listing rules and image standards;
- shipping settings per vendor, since vendors ship from different places;
- a vendor dashboard for orders, payouts and reports.
When does extending WooCommerce make sense?
For a shop-style marketplace, WooCommerce with a marketplace extension is the fastest route. WooCommerce's own Product Vendors extension shows what this model looks like:
- vendors apply through a registration form and start as pending vendors until you approve them;
- commissions can be fixed or a percentage, set per vendor, per product or for the whole store;
- vendors can be paid instantly through PayPal Payouts or on a weekly, bi-weekly, monthly or manual schedule, although automated PayPal payouts need a PayPal Business account and are not available in every country;
- customers use your single checkout, and you process all payments and refunds.
Third-party marketplace plugins add features such as vendor storefronts and split payments through gateways. Check how each handles payouts in your vendors' countries, and test a refund on a multi-vendor order before you choose. Our WordPress plugin developers can fill gaps with small extensions rather than a full rebuild. If vendors will sell recurring products, our guide to WooCommerce subscriptions covers renewals and failed payments.
When is a custom build worth it?
Build custom when the marketplace logic is your competitive edge. Signs you are there:
- orders involve booking, quoting, bidding or matching rather than a cart;
- payouts depend on milestones, completed services or splits between several parties;
- you need your own vendor app or a mobile app for buyers;
- you expect to change commission models often and want them in code, not plugin settings.
A custom marketplace is a bigger project, so start with the smallest version that proves both vendors and buyers will show up. Our guide on how to plan an MVP shows how to cut scope, and a clear requirements brief gets you quotes you can compare.
How do you handle reviews, quality and buyer complaints?
Trust is what a marketplace sells. Plan these from the start:
- reviews of vendors that only verified buyers can leave;
- a clear process for complaints, with deadlines for vendors to respond;
- a way to warn, suspend or remove vendors who break the rules;
- messages between buyers and vendors that stay on your platform, so you have a record when a dispute comes in.
These features are rarely complete in plugins, and they are often where custom work starts. Our guide to client portal features covers similar account and messaging decisions.
Frequently asked questions
How do marketplaces usually make money?
The common models are a commission on each sale, a monthly fee for vendors, listing fees, or a service fee paid by buyers. Many marketplaces combine two of them. Start with one simple model that vendors understand, and make sure your payment setup can change it later without rebuilding checkout.
Do we need a licence to hold and pay out vendor money?
It depends on your country and how money flows. Collecting payments for others and paying them out can be regulated activity in some places. Using a payments platform built for marketplaces moves much of that work to the provider, but ask a lawyer or accountant before launch.
Can we pay vendors in other countries?
Often, yes, but it depends on your platform's country. Stripe's Connect overview says the countries where you can have connected accounts depend on your platform's business location, and cross-border payouts in local currencies are available to platforms that qualify. Check this before you promise international vendors anything.
Can we start on WooCommerce and move to a custom build later?
Yes, and many marketplaces should. Keep vendor, product and order data clean so it can be migrated. If both versions use the same payments platform account, vendors may not need to onboard again. Plan the move when the plugin limits, not before.
Who handles tax on marketplace sales?
In many places, rules make marketplaces responsible for collecting sales tax or VAT on sales made by their sellers, at least for some orders. The rules differ by country and state, so get advice from an accountant who knows marketplaces before you set up checkout and invoices.
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