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Fatwa CenterRuling on dropshipping transactions
Question
Assalamualaikum Well I want to ask if I run a dropshipping business wherein I display these products on online selling sites provided by third parties where there is a service fee of a certain percentage of the price of the item(s) sold for every transaction, is this kind of thing allowed ? Are there any restrictions or special requirements for this? Hope for your explanation
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.
Among the legitimate forms of the mentioned transaction are the following:
1. That you are only a broker acting as a mediator between the one ordering the goods and the owner of the goods, to coordinate between them and take a commission from the buyer or from the seller, provided the one from whom you receive a commission knows about it; perhaps this is the case that is mentioned in the question.
2. That you are an agent for the buyer in purchasing the goods in return for a commission that you receive from him. He must know about this commission and he must agree to it; this commission cannot be added to the price to be received from him without his knowledge.
3. That you are an agent for the seller (the owner of the goods) and you agree with him to display the product on your site and sell it to anyone who wants to buy it in return for a commission that you receive from him. It is permissible for the seller (the owner of the goods) to add this commission to the price, so the price for the buyer includes the price of the goods and commission for it.
4. That you are not an agent for any party and not a broker; rather, you display the product and its features and you agree with the person wishing to buy the product to supply it to him at a definite time in return for a definite price. Here, it is a condition that you receive the whole price at the time of transaction even by him depositing the price in your bank account, for example. This is what is called the Salam contract, which is to sell a specified (defined/described) product whose price is paid in advance (and the seller will supply it on a pre-agreed date and the product is the liability of the seller up to the agreed future date). Then, you would buy the goods from their owner and order him to ship them to the first buyer so that he would receive it at the fixed time which you both agreed upon.
These are some of the legitimate ways to hold the transaction, and we have clarified this further in Fatwa 161689.
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