Ruling on dropshipping
22-7-2011 | IslamWeb
Question:
I want to ask regarding dropshipping. (Drop shipping is a supply chain management technique in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to either the manufacturer or a wholesaler, who then ships the goods directly to the customer. As in all retail businesses, the retailers make their profit on the difference between the wholesale and retail price.) In my case, I’m the retailer. I get the product from a dropshipper. Then, I asked him for the pictures and advertised it on eBay. But I don’t have the product, it’s with the supplier. Does this situation falls under this hadeeth : Abu Dawood (3503), al-Tirmidhi (1232) and al-Nasaa’i (4613) narrated from Hakeem ibn Hizaam (may Allaah be pleased with him) that he said: I asked the Messenger of Allaah (peace and blessings of Allaah be upon him): “O Messenger of Allaah, people come to me wanting to buy something that I do not possess; should I buy it for them from the marketplace? He said: “Do not sell that which you do not possess.” This hadeeth was classed as saheeh by al-Albaani in Saheeh al-Nasaa’i. By the way, I do have an ‘agreement with the supplier’ to advertise and sell the product. So, can I be considered as the “agent” in this situation? Is being an agent is permissible in this situation?
Answer:
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His Slave and Messenger.
What we understand from your question is that you do not buy the goods, neither from the wholesaler nor from the manufacturer; and you rather advertise its picture, and if you find somebody having the desire for it, you would sell it to him at the retail price, and buy it from the wholesaler at the wholesale price, with your profit being the difference between the two prices. However, that is forbidden under Sharee‘ah, because it is to sell what you do not have in your possession, and make profit of that which has not become your liability (i.e. you do not bear its risks and responsibility).
The Sharee’ah alternative to that is to act as a broker on behalf of the owner of the goods, be he its manufacturer or wholesaler; and it is permissible for you to ask for a commission for brokerage agreed upon with the seller or the buyer or both.
If you buy the goods from the manufacturer or the wholesaler for yourself, and then wish to sell it, you should first hold it in your possession, taking into consideration that the possession of anything differs according to the nature of that thing. Also, you have the right to appoint an agent to possess it on your behalf, even by keeping it in a separate place in the seller's warehouse distinct from his own; and if you find somebody who wishes to buy it, you could sell it to him by whatever price you both agree upon, and you could ship it to him, or let the seller do so if he committed himself to do it and provided this service.
Allaah Knows best.