Dropshipping involves selling an item that you don’t have, then placing an order with a supplier to ship the sold item directly to the buyer.
The question arises whether or not such a transaction is permissible in Islam due to the appearance of selling something that the retailer does not own.
However, it is not true this rule is not absolute and cannot apply in all cases. whereas another Hadith.
As the above Hadith gives us implicit approval as Selling dates two or three years in advance of delivery; means at the time of sale these dates didn’t even exist. This type of advance sale in Islamic finance is known as a “Bai’ Al-salam” Salam contract.
However, the Prophet peace be upon him did not tell the people of Medina not to sell that which was not with them as he did to Hakam bin Hizam, may Allah be pleased with him.
Therefore, it must be true that there are instances where selling that which is not with you is prohibited and others where it is not.
When is it permissible to sell what is not with us?
In the case of dropshipping, when trying to ascertain whether it falls in the category of “don’t sell what is not with you” or a Salam contract, we need to ask the following:
Has a supplier been identified who is willing and likely to be able to supply the item on the agreed terms prior to the sale?
If a willing and likely to be able supplier has been identified prior to completing the sale then you are likely in Salam contract territory where the restriction of having what you sell prior to the sale can be eased.
On the other hand, if you’re selling something and only after you make the sale do you figure out who is going to supply the item then this falls in “don’t sell what is not with you” territory.
Additional considerations for permissible drop shipping include:
- A proper description of the item being sold so that the buyer knows exactly what they purchased.
- You aren’t dealing with a haram item (you already knew that).
- Specifying the time period by which the item should be delivered to the customer.
- No drop shipping of ribawi items e.g. Gold or Silver.
- The retailer i.e. the party making the sale accepts responsibility for delivering the items they are selling according to their advertised specifications.
Summary
If we have a supplier and he is willing and likely to be able to fulfill our order of specified items you are selling online before getting orders, then the restriction on having what you sell with you before you make a sale can be eased. Therefore, dropshipping can be permissible under the above-mentioned conditions.