Short answer
It depends on how you set it up. Selling a product you do not yet own goes against a clear hadith, so the usual dropshipping model needs changing. It is halal if you act as the supplier's agent for a fee or commission, or if you buy the item first and then sell it, and the product itself is halal.
Selling goods you do not own is void, and reselling movable goods before you take possession (actual, or constructive possession where the risk has passed to you) is not permitted. Working as an agent (wakil) or broker for a commission is permitted, and so is taking a customer's order as a promise and making the sale after you have bought the item.
Other madhhabs
- Shafi'i
- Nothing at all may be resold before taking possession, including land, which the Hanafi school exempts.
- Maliki
- The ban on reselling before possession applies mainly to food. Selling what you do not own at all is forbidden, as in the other schools.
- Hanbali
- In the main view, the possession rule applies to food and goods sold by measure, weight or count. Selling what you do not own is forbidden.
Explanation
In typical dropshipping, you list a product, a customer pays you, and only then do you order it from a supplier who ships it directly. At the moment you sold it, you did not own it. The Prophet ﷺ told Hakim ibn Hizam, "Do not sell what you do not have," and forbade profit on goods whose risk you do not carry.
Halal ways to run the same business:
- Agency. Agree with the supplier that you sell on their behalf for a set commission or fee, and present yourself honestly as a seller for them. The sale is theirs and your earning is a lawful wage.
- Promise, then sale. Treat the customer's order and payment as a promise and a deposit. Buy the item from the supplier first, so it is yours and at your risk, then complete the sale to the customer.
- Hold stock. Buy inventory first, including stock held in a fulfilment warehouse in your name.
- Affiliate marketing. Earning a commission for referring buyers to a halal product is permitted.
Honesty matters as much as the contract. Fake reviews, false "only 2 left" timers, photos that do not match the product and hidden delivery times are cheating, and the Prophet ﷺ said whoever cheats is not one of us. When buyer and seller are truthful and clear, their sale is blessed.
Sell only halal products, and ask a mufti to look over your supplier agreement.
Ask a mufti about your own case. This answer explains the general ruling. When the details of your situation matter, as they do here, ask a qualified mufti and give them the full facts. Where to ask a scholar.
The evidence
Quran, Surah An-Nisaa 4:29
يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوا۟ لَا تَأْكُلُوٓا۟ أَمْوَٰلَكُم بَيْنَكُم بِٱلْبَٰطِلِ إِلَّآ أَن تَكُونَ تِجَٰرَةً عَن تَرَاضٍۢ مِّنكُمْ ۚ وَلَا تَقْتُلُوٓا۟ أَنفُسَكُمْ ۚ إِنَّ ٱللَّهَ كَانَ بِكُمْ رَحِيمًۭا ﴿٢٩﴾
O you who have believed, do not consume one another's wealth unjustly but only [in lawful] business by mutual consent. And do not kill yourselves [or one another]. Indeed, Allah is to you ever Merciful.
Profit must come through a valid, agreed sale.
Sunan Abi Dawud 3503
Graded sahih... لا تبع ما ليس عندك ...
"Do not sell what you do not have."
Selling an item before owning it is forbidden.
Jami' at-Tirmidhi 1234
Graded hasan sahih... ولا ربح ما لم يضمن ولا بيع ما ليس عندك ...
"Nor profit on what you do not bear the risk of, nor selling what you do not have."
The seller must own the item and carry its risk.
Sahih Muslim 101
Sahih... من غشنا فليس منا ...
"Whoever cheats us is not one of us."
Misleading customers is forbidden.
Where the ruling is recorded
- al-Hidaya, Kitab al-Buyu', on selling before taking possession. Movable goods may not be resold before possession.
- Mufti Taqi Usmani, An Introduction to Islamic Finance, Chapters on agency and on the promise to purchase. How an agent or a prior promise makes such sales lawful.
- al-Mughni (Ibn Qudama), Kitab al-Buyu', on selling before possession. The positions of the schools on the possession rule.
This answer is pending review by the scholars on our team. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.