The “WooCommerce / Settings / Products / For “Shop Page Display” change that to “Show Products”.” fix is whats needed to make it work.
WC Vendors hooks into the product archives to show vendor pages. So your /shop/ URL will have to show products, not categories.
Usually a store wouldn’t use /shop/ send their customers to their store. They’d use a widget on a homepage, or some other design aspect to show categories, featured products, products on sale, etc…. Just sending traffic to /shop/ isn’t recommended as you cant really customize it once you get your store online.
Regards,
Ben