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Dropshipping Online Business
Business of Dropshipping Halal or Haram in Islam?
There are scholars who say its Haram on the basis of these Hadiths
Please tell how authentic the Hadiths are? What’s Sir Javed Ahmad Ghamidi’s view on it. Can a muslim do this business?
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10 Replies
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Dropshipping Online Business
updated 1 year, 11 months ago
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10
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As per Quran, the actual ethical prohibition underlying all economic transactions is لَا تَأْكُلُوا أَمْوَالَكُمْ بَيْنَكُمْ بِالْبَاطِلِ:
يَاأَيُّهَا الَّذِينَ آمَنُوا لَا تَأْكُلُوا أَمْوَالَكُمْ بَيْنَكُمْ بِالْبَاطِلِ إِلَّا أَنْ تَكُونَ تِجَارَةً عَنْ تَرَاضٍ مِنْكُمْ
Believers! Do not devour one another’s wealth by wrongful means except through trading by mutual consent. (4:29)
This verse prohibits a person from devouring other people’s wealth through means which are against justice, honesty, fairness and against the good conventions of a society. Obtaining money through illegal gratification, theft, extortion, lying, co-operation with evil, embezzlement, misappropriation, consuming unclaimed items without publicizing them, all come under it. These evils require no further discussion since they are universally acknowledged sins in every society and in every religion. Transactions and activities which become a source of deceit or damage for the parties involved are also corollaries of this directive. Any business activity which contains any such element in it, is to be considered prohibited. Other than that, all business activities are considered as allowed.
All the Ahadith quoted in the question above are an application of the same principle of Quran as done by the Prophet Muhammad (sws) himself, considering the loopholes in these arrangements at that specific-time. Therefore, if it can be made sure that no injustice, dishonesty and deceit can happen in a business like dropshipping because of a legal cover or standards made by the industry etc. then there is no prohibition in dropshipping business as well.
Since it’s a hot topic in today’s time, I will forward it for a scholarly response as well and will let you know what bounces back.
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Ok I’m looking forward for scholarly response
Jazak Allah
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Update of response @UmerQureshi
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It will be shared here as soon as we get a response.
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Recently I was in a private setting where this question was posed to Ghamidi sahab. His response was about the same as shared by Umer Qureshi sahab above. In a nutshell, if it can be ensured that the business is conducted in a fair manner and there’s no deceit (usually the case these days) then it can’t be deemed as prohibited.
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Most payment processors such as Paypal and Stripe do not allow Dropshipping because they label it as ‘unethical’.
Will this come under ‘Unfair’, if we sell something to someone at a higher cost than the actual cost? The person could buy the same product at much lesser price from the same store but he is unaware of such store/marketplace. We bridge that gap by become a middleman and sell those same products to him by keeping our profit, is it fair?
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“Most payment processors such as Paypal and Stripe do not allow Dropshipping because they label it as ‘unethical’.”
This is not correct according to my knowledge. You might want to research this further.
“Will this come under ‘Unfair’, if we sell something to someone at a higher cost than the actual cost?”
No. All retail businesses work on the same principle.
“The person could buy the same product at much lesser price”
Generally drop shippers do not sell to retail customers. They may also impose a fee as well as other requirements such as minimum quantity and customer service for their business customers. Of course every drop shipper might not be the same, so the decision must be made accordingly.
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Regarding Amazon dropshipping, generally its procedure is that you list product on Amazon, you get the order and then buy it at low cost from any other platform like Walmart and send it directly to the customer. Custom gets the product he wants. Amazon prohibits this in his policy because the customer gets the product in other packing such as in packing of Walmart. Amazon says that dropshipping is allowed only if you get your name on the packing. Walmart and other platforms are cheap and are competitors of Amazon so it would prohibit it for sure.
The customer gets the product which he wants. There is no deceit in that. But Amazon’s rules and regulations doesn’t permit it so it would be considered illegal? Given that it’s generally no bad thing in itself but Amazon doesn’t permit it because of its competition.
Kindly guide if I am wrong in it.
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Breach of a legal contract is obviously illegal. If you conduct your business on Amazon, you must remain within the bounds of Amazon’s terms and conditions as specified in their legal contract with you.
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Understood.
Thank you Faisal sb for your guidance.
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