Subject : Islamic Ruling on E-Commerce Drop Shipping
Fatwa Number : 3754
Date : 19-03-2023
Classified : Current Financial Issues
Fatwa Type : Search Fatawaa

Question :

What is the ruling of Sharia on the e-commerce drop shipping? Is working in this line of business lawful or unlawful?

The Answer :

All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.

The literal translation of drop shipping is (to ship (goods) as a drop shipment). This is conducted in reality as a sale transaction that involves three parties: owner of the website or e-store, customer, seller or manufacturer of product.

The use of this term isn`t confined to a certain form of sale transaction. Rather, it refers to different forms, so its ruling varies according to these forms. The most important of these forms are:

First: The owner of the website or the e-store obtains a pre-authorization from the supplier or factory owner to sell a specific product that he offers at his website or e-store in return for a percentage or a lump sum; provided that the seller supplies those products directly to the customer. This is one form of permissible agency.

Second: The owner of the website agrees to display the seller`s products link on his site in return for a commission on each purchase made by accessing that link. This is a form of permissible commission or auctioneering.

Third: The owner of the website displays the products of sellers and suppliers without pre-authorization or pre-agreement, then they are sold to the customer before possession and without the owner of the website having collected their price. After that, the products are bought from the supplier along with the request that they be delivered to the customer as if the latter is the first buyer. This is selling a product before possessing it and this is forbidden according to the teachings of Sharia. The reason is that the product wasn`t possessed, wasn`t collected and the customer didn`t pay for it. Simply, an unpossessed amount of money was withheld based on that product.

Fourth: The owner of the website displays a specific product that he can provide. If the customer buys it, it is conditioned that he pays for it immediately to be provided to him within an agreed period of time. After the owner of the website purchases the product from a seller, he can ask the latter to deliver it to that customer's address. This form of sale is permissible and makes it a salam transaction.

We remind that different forms of e-commerce may be presented under this term {Drop shipping}; therefore, each case need to be studied to deliver the proper ruling on it. And Allah the Almighty knows best. 



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