Educational content only. We analyze the Dropshipping business model through the lens of Islamic Trade Law (Fiqh al-Mu'amalat), specifically the prohibition of Bai' al-Ma'dum (selling what does not exist/is not owned).
This is not financial, legal, or religious advice. Please consult a qualified scholar for your specific situation. We do not issue fatwas.
Dropshipping is a popular low-risk business model: you sell a product, and a third party (supplier) ships it directly to the customer. You never touch the stock. While financially smart, Islamically it hits a major hurdle: The Prophet (ﷺ) explicitly forbade selling an item you do not possess.
Scholarly consensus overview
1. The "Don't Sell What You Don't Own" Rule
The primary issue is the Hadith of Hakim ibn Hizam, who asked the Prophet (ﷺ): "O Messenger of Allah, a man comes to me wanting to buy something I do not possess. Shall I buy it for him from the market?" The Prophet (ﷺ) replied: "Do not sell what you do not have." (Tirmidhi).
In classic dropshipping, you take money from the customer first, then you buy the item. This creates risk (Gharar): What if the supplier is out of stock? What if the price changes?
Many scholars consider the standard dropshipping model Impermissible (Haram) for this reason.
The Golden Rule: Don't Sell What You Don't Have
The Prophet (SAW) forbade selling an item before taking possession (Qabd).
"I list a watch on eBay for £50. When it sells, I quickly go to AliExpress and buy it for £20."
Verdict: HARAM. You sold an item you did not own at the time of sale. This is Bay' al-Ma'dum.
"I explicitly state I am an agent. When you pay me £50, I use it to buy the watch on your behalf for £20 and keep £30 as my service fee."
Verdict: HALAL. You corrected the contract structure. You are now a Service Provider (Wakeel), not a Seller.
2. How to Make it Halal (Wakala/Salam)
However, scholars have outlined modifications to make the model Halal:
Option A: The Agency (Wakala) Model
Instead of being a "Seller", you act as an Agent (Wakil) for the supplier. You market their goods for a commission.
Alternatively, you can act as an Agent for the Customer. The customer pays you to "go and buy this item for me". You charge a service fee.
Option B: The Salam Contract
Salam is a special type of sale allowed by the Prophet (ﷺ) for items that are not yet owned (originally for crops). To use this:
- The full price must be paid upfront.
- The item must be clearly defined (specs, size, color) so there is no ambiguity.
- The delivery date must be fixed.
- The item must be generally available in the market (not a specific unique item).
3. Deception (Ghash) & Shipping
Another major issue in dropshipping is Ghash (Deception).
If you show pictures of a high-quality product but ship a cheap knock-off, or if you imply the item is in the UK but it ships from China taking 4 weeks, this is sinful deception. Transparency is non-negotiable in Islamic trade.
Gharar (Uncertainty) Detector
A valid Ju'alah contract must be free from ambiguity.
Is the commission percentage or fixed amount clearly defined BEFORE you start work?
Is the "trigger" for payment clear?
Are there unreasonable "Clawback" clauses?
4. Product Ethics
Finally, the product itself must be Halal. Dropshipping often involves cheap, low-quality plastic goods ("landfill fodder"). While not strictly Haram, wastefulness is discouraged. Selling fake brands or prohibited items (vapes, adult items) is strictly forbidden.
What are you selling?
Income from selling Haram items is Haram. Income from low-quality "junk" can be Makruh (Disliked) or Haram if deceptive.
Selling useful items (cables, cases, decor) is Halal. Ensure the quality matches the description.
Where scholars usually draw the line
Ownership vs Permission.
- • Possession (Qabd): Some scholars insist you must physically receive the goods before shipping them (to inspect quality). Others allow "Constructive Possession" (having the tracking number/rights to the goods) if you are acting as a verified distributor.
- • Guarantee (Daman): As the seller, YOU are responsible if the item breaks or gets lost. You cannot blame the Chinese supplier and leave the customer with nothing.
Summary
- Standard Model is Risky: Selling before owning violates the "Sell what you don't have" rule according to many scholars.
- Switch to Agency: Reframe your business as a "Buying Service" or become an authorized "Agent" for the supplier to make it Halal.
- Be Honest: Never hide shipping times or product origins.
Transparency
How we wrote this
We referenced the famous Hadith of Hakim ibn Hizam and modern Fiqh resolutions on e-commerce and Salam contracts.
- Sunan al-Tirmidhi (Hadith on Selling what one does not own)
- AAOIFI Standards on Salam and Parallel Salam
- Rulings on 'Wakala' (Agency) in trade.