Is Dropshipping Permissible Through a Forward Sale Contract (Salam)?

Answered by Shaykh Muhammad Carr

Question

Is Dropshipping via a forward sale contract (salam) permissible? Must I disclose it to customers? If permissible, would a policy agreement at checkout suffice for disclosure? Additionally, are there any restrictions on profit margins?

Answer

In the Name of Allah, the Most Merciful and Compassionate.

Thank you for your question.

‘Abdullah ibn ‘Abbas (Allah be pleased with them) narrated,

“When the Messenger of Allah (Allah bless him and give him peace) arrived in Madina, he found that people were paying in advance for fruits to be delivered over one, two, or three years. He said, ‘Whoever pays in advance for something should do so for a known measure, a known weight, and a specified term.’”

Dropshipping via a forward sale contract (salam) is permissible. This falls under a forward sale contract (salam), where you are selling a specified item (mawsuf) to the customer even though it does not yet exist at the time of the sale. This is permissible in the Shafi‘i school. [See: Shirbini, Mughni al-Muhtaj]

Dropshipping consists of a number of separate tiers:

1. The sale of the item to the client
2. Sourcing the item from the supplier
3. Delivering the item to the client

Dropshipping via a forward sale contract (salam) would be permissible as long as the conditions for each stage are met.

There is no need for disclosure and no restrictions on profit margins.

I pray this is of benefit and Allah guides us all.

[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Dr. Muhammad Abu Bakr Badhib

Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefitted from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali, and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door to students. As an imam, he has the unique opportunity to serve his community in daily life.

In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari‘a Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.