Dropshipping

QUESTION:-

1. Will it be permissible to open an online art gallery, where I will take a fee from the artists to showcase their work? If the art that is showcased is of an impermissible nature, will I be responsible for that account to shariah?

2. Dropshipping, as I understand it, is not permissible due to not having ownership of the items being sold. If a disclaimer or a notice is given to the customer that states that once the order is placed, only then will the products be sourced, will this be permissible?

ANSWER:-

1. It will only be permissible for you to showcase or display pieces of art that are permitted in Shariah (such as art of inanimate objects like trees, plants, the ocean, etc.),  or else you will be sinful in the court of Allah Ta’ala if impermissible pieces of art are displayed by you, on behalf of your clients.

2. There are two options regarding dropshipping. The first option is, where you will take a deposit from the client when he places an order with you. Thereafter, you will source the goods from the supplier (with your own funds), and only when you take possession of the goods, will you conclude the sale. In this instance, the deposit remains as Amaanat in your possession and cannot be utilized in any way. When concluding the transaction, you will hand over the Amaanat to the purchaser (either physically or via EFT) and he may then use the funds to pay for his purchase.

The second option is to enact a transaction known as Bay-e-Salam. In this transaction, the seller (referred to as the Muslam Ilaihi) is required to provide a complete description of the product that he is selling to the buyer (such as the description of the item being sold, the brand name or make of the item, the grade or quality, etc.) The quantity of items, the time of delivery, the purchase price and the place of delivery must all be stipulated and fixed, leaving no ambiguity whatsoever. Thereafter, the purchaser provides the capital up-front to the seller, which the seller uses to purchase the goods. This too is an option with the proviso that, all the requirements of Bay-e-Salam are fulfilled.

In conclusion, if one adopts any one of the above methods of transacting, then dropshipping will be permitted. By merely informing the purchaser that the goods will only be ordered on receiving payment from them is not sufficient, as the seller is still selling goods that he hasn’t taken possession of, which is prohibited in the Hadith.

ولا يصح السلم عند أبي حنيفة إلا بسبع شرائط تذكر في العقد: جنسٍ معلومٍ، ونوعٍ معلومٍ، وصفةٍ معلومةٍ، ومقدارٍ معلومٍ، وأجلٍ معلومٍ، ومعرفة مقدار رأس المال إذا كان مما يتعلق العقد على مقداره—الخ (اللباب في شرح الكتاب ص43 ج2)

ALLAH TA’ALA ALONE IN HIS INFINITE KNOWLEDGE KNOWS BEST!

ANSWERED BY:

Mufti Mohammed Desai                                                                                                                                         

Date:-  21 Dhul Hijjah 1444 / 11 July 2023