The direct costs involved in producing the goods sold by a e-commerce business.
COGS (Cost of Goods Sold) is a fundamental accounting metric for D2C brands. In the context of Print on Demand (POD) and apparel dropshipping, COGS consists of several direct expenses: the base cost of the blank garment (e.g., a combed cotton t-shirt or French Terry hoodie), the print fee (like DTF or screen printing application), the cost of neck labels or hangtags, individual packaging materials (such as custom poly mailers or bio-degradable bags), and the forward courier shipping fee to transport the product to the consumer. For instance, if a streetwear brand in India sells a heavy-knit 240 GSM oversized t-shirt for ₹1,499: the blank tee might cost ₹280, the front-and-back DTF print ₹180, custom neck labeling and hangtags ₹30, packaging ₹10, and forward logistics ₹110. This leads to a total COGS of ₹610. Subtracting this from the retail price gives a gross profit of ₹889 (a 59.3% gross margin). Crucially, COGS does not include indirect operating expenses like Shopify subscriptions, digital marketing spend (CAC), payment gateway processing fees, or reverse logistics due to RTOs, making precise calculation of COGS vital to setting profitable retail price markups.