Vendor payouts, one of the biggest headaches you didn’t know you would have with an online marketplace.  Being conscious of both your customer’s needs, and your vendor’s needs, finding the right payment schedule can be difficult.  Luckily, there are a few factors you can look at, that will often guide you to the best payment structure for your scenario.

The biggest factor in paying your vendors will be how quickly a customer’s order is fulfilled.  If you have a marketplace that sells digital products, and those products are available immediately after purchase, you may want to consider paying your vendors immediately.  The reason being, you know the product was delivered, so you don’t have to worry about any fulfillment issues, and generally, vendors will want their commission payments ASAP.  The only caveat to this would be any refund period you may have.  For example, if you provide customers with a 3 day money back guarantee, you may consider delaying those vendor payments by 3 days.  Refunds tend to be much easier if you can issue them directly, and don’t have to worry about a vendor completing the refund.

The real conundrum is when your marketplace sells physical goods.  With physical items, you must rely on the vendor to actually ship the product, the product has to arrive safely, and the customer be happy with it.  While most times there will be zero issues, you do have to take into account those times an issue does arise.

Here are a few “What ifs” to consider:

You’ve already paid your vendor, and then a customer asks for a refund, are you comfortable being a mediator?

A vendor refuses to provide a refund, are you willing to cover that cost and refund the customer yourself?  And, if a vendor makes you dip into your own funds for a refund, will they continue to be a vendor?

Those are all questions you need to take into consideration when planning your vendor payment method.

Beyond that, you will need to consider the types of products being sold.  Do they have long warranties on them?  Are they expensive, or “throw away” products?  Are products made to order, and if so, what is the “lead time” between an order and shipment.

Once you figure out when you want to pay your vendors, the next big hurdle is figuring out how you are going to pay your vendors.  PayPal use to have a great system, called Adaptive Payments, and it worked beautifully for marketplace.  But, like all good things, that has come to an end, and now many marketplaces are scratching their heads on how they should pay their vendors.  Because of this, we decided to build our Payouts plugin.

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The great thing about PayPal is most everyone has a PayPal account.  Plus, it is one of the most trusted virtual wallets on the internet.  Payouts uses PayPal to disburse payments to your vendors on a schedule of your choosing.  You can pay commissions when:

  • The customer pays for an item
  • A vendor marks their items as “Shipped”
  • On a set schedule (daily, weekly, bi-weekly or monthly)
  • Anytime, via a manual payment option

Beyond that, you can add in delays to those payments, ranging from 1 day to weeks and even months. The flexibility Payouts affords allows you to create a truly custom payment experience for your site.

The method you use to pay your vendors is a big decision for every marketplace admin.  Finding the right system that both keeps your vendors happy, and you feeling secure, can be difficult.  But, with systems like Payouts for WC Vendors, implementing your payment scheduling is quick and easy!

Enables marketplaces to effortlessly pay vendor commissions with the PayPal Payouts API.

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