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Is Dropshipping Permissible?

Ustadh Farid Dingle is asked if dropshipping permissible if one operates a store.

Dropshipping is where you may have a store, then the customer places the order. You then go to your supplier to send the product to the customer. You never own the product or see the product, so I am wondering if this is permissible within Islam?

This is perfectly fine with generic items as it constitutes a salam contract. You couldn’t do that with something specific, like a specific used iphone, or a specific antique item. (Minhaj al-Talibin)

I pray this helps.

Farid

Checked and approved by Shaykh Faraz Rabbani.

How to Pay Zakat on Trade Goods?

Answered by Ustadh Tabraze Azam

Question: Assalam alaykum

If I buy 1000 pieces of trade goods for 1€ each, do I have to pay zakat on the market value? Let’s say the sales price is 7€. Does it mean that I have to pay zakat on 7000€ ?

How should I count the sales tax or other expenses like selling on ebay who requires you to pay a percentage of the sales price to them?

Answer: Wa alaikum assalam wa rahmatullah,

Generally, and with regards to calculating the net worth of trade goods in your possession, you should use their current market value.

Note that there are usually three sets of valuation: (1) the cost or wholesale price, which is the price you most likely paid to purchase the goods, (2) the current market value, and (3) the retail price, which you listed in your question as the sale price, namely, something which can be self-determined.

If there are liabilities which are due, whether for the purposes of tax or other general overheads, these can be deducted when calculating your net zakatable assets.

Please also see: Is Your Zakat Due? – A Reader and Resources on Giving Zakat and: Zakat: A Comprehensive SeekersHub Reader and: Years of Past Due Zakat, and Zakat on Non-Selling or Damaged Trade Goods

And Allah Most High knows best.

wassalam,
[Ustadh] Tabraze Azam

Checked and Approved by Shaykh Faraz Rabbani

Ustadh Tabraze Azam holds a BSc in Computer Science from the University of Leicester, where he also served as the President of the Islamic Society. He memorised the entire Qur’an in his hometown of Ipswich at the tender age of sixteen, and has since studied the Islamic Sciences in traditional settings in the UK, Jordan and Turkey. He is currently pursuing advanced studies in Jordan, where he is presently based with his family.

Should I Pay Zakat on Trade Goods Even If I Can’t Find Buyers?

Answered by Ustadh Salman Younas
Question: I bought some trade goods, but they have a very small online market which is hard to reach. I’ve tried selling them on an online forum without success. Are these goods zakatable each year until I establish a successful website and insha’Allah start selling them?
Answer: assalamu `alaykum
Zakat is due on trade goods. For something to be considered a trade good, a clear and firm intention of it being so needs to be present at the time the good is purchased. If one purchased the good without the intention of it being a trade commodity, Zakat would not be due upon it, even if the intention was changed later on. [Sarakhsi, Mabsut; Kasani, Bada`I al-Sana`I; Haskafi, Durr al-Mukhtar]
If this is the case with the items you mention, Zakat will be due upon them.
Salman
Checked & Approved by Shaykh Faraz Rabbani.