@Mufti_Billal @Mufti_Faraz_Adam As-Salaam Alaikum wa rahmatullahi wa barakatuhu to all. I am a little late to this forum, have been seeing many fatwa and opinions on drop-shipping and if it is shariah compliant. After understanding the various positions, I have concluded with the following opinion. It is a little lengthy sorry about that, Would really appreciate your comment on it.
Please note that my recent eagerness to start a drop-shipping business might influence this opinion, so please correct me if I missed out something or added something unnecessary or misinterpreted something or made a wrong opinion. Nevertheless, I tried to keep my view Islamic and not influenced by my interests. May Allah guide us.
I have put the opinion with regards to salam transaction as it is the closest concept to the drop-shipping done today. There might be other ways like broker, or partnership but I did not study about them.
OPINION:
Requirements for understanding this opinion:
-To know what dropshipping is exactly, especially the way it is widely done today.
-To know the 2 hadiths that seem to cause contradictions- Jami’ At-Tirmidhi 1232 (1st Hadith) and Sahih Al-Bukhari 2239 (2nd Hadith)
-And most importantly, a god-fearing heart with clean niyyah.
The main concept causing contradiction in drop-shipping is ‘selling something you don’t own’. This concept is seen in the 2 hadiths mentioned above.
In complete watered-down form- 1st hadith doesn’t allow selling in advance what you don’t possess and 2nd Hadith does allow selling in advance even if you don’t possess it at the moment(with conditions). Since they seem to contradict, therefore, the context and reasoning of the hadiths should be understood to come to a conclusion.
For dropshipping to be halal, it should not come under the 1st hadith that says ‘don’t sell what you don’t possess’ and should come under the 2nd hadith of ‘salam transaction of the dates’. Both the conditions should be met.
The 1st hadith was given to not cause any ambiguity in the transaction which can put both the parties in unfavourable situations and can lead to a major dispute between them. And the 2nd hadith is because people are not allowed to take a loan, so this hadith stimulates business for the seller and also brings the product to the buyer, given that both agree to the strict conditions. Dropshipping should satisfy both the concept to be considered acceptable.
For the 1st hadith, the hadith is for when a seller first makes the sale of a product and after making the sale he goes to look how to get that product( in this case, a source to provide that product). This causes great ambiguity on whether he will even get it, will the price be as expected included shipping etc, will the quality be as expected, what is the description?, and most importantly when will he get the product(i.e. delivery date) because the seller might keep delaying the delivery until he gets a source who can give the product of good quality, good price etc.
But as for dropshipping, the seller 1st gets the source to provide the product with its description, price, quality and also when will it deliver. So this causes no ambiguity and it is like a normal sale, except that the product doesn’t belong to the seller. So will the seller be able to show someone else’s product for sale without knowing if the other person(Manufacturer) will even sell him or not? No, he cannot unless he is in agreement with the other person (Manufacturer) to show their products and sell, then he becomes like an authorised agent who is authorised by the manufacturer to sell their products (Basically, the seller needs to be certain that the product will be sold to him and cannot leave any space for doubt that whether he can buy it after selling it to the buyer). The fact that the manufacturer agrees to handle and deliver is part of the contract which doesn’t affect the hadith.
For the 2nd hadith, the dropshipping method should meet all the conditions of a ‘salam’ transaction, including adequate description(there should be no ambiguity or doubt), price and delivery date etc. The buyer should be told that they are entering a salam transaction wherein, in this case, the product is purchased after the buyer pays in full. The seller can then do a transaction with the manufacturer for that product.
The adequate description of the product to be shown on the seller’s website is his responsibility and he should confirm its accuracy.
The liability of the product is also going to be as per the transaction. Between the buyer and seller, the seller has full responsibility to bring the product to the buyer with agreed factors(like description, delivery date and measure/quantity etc). Between the seller and the manufacturer, the manufacturer has full responsibility to bring the product to wherever and whenever, as agreed by the parties(in this case it is the address of the buyer). If the product doesn’t reach the buyer or is not as its description, the seller is responsible to the buyer and should either arrange to send another product or refund the full price(whatever the buyer wishes). This responsibility should not be altered even if it is the manufacturer’s fault and whether or not the manufacturer refunds the seller. Similarly, b/w the manufacturer and the seller, the manufacturer is responsible to the seller and should replace or refund the product if such an issue happens (seller can decide which one he wants). The validity of liability on the 2 transactions is independent of each other.
Dropshipping agrees with both hadiths and satisfies its reasoning and requirements. With this, the niyyah of the seller should be clean as well and strictly follow the requirements and not look to deceit the buyer or find loopholes in the transaction to make extra money.
And Allah knows the best.
As much as I have seen, according to me, the opinions that are against drop-shipping, like that of Sh. Assim Al-Hakeem, seem to be concluded without completely looking at all different aspects and focusing strictly only on the 1st hadith. This could be because sheikh answered it live and sheikh was continuously answering questions on other topics which gave less time for this, particularly new topic.
Allah knows the best, may he guide us all. JazakAllah