Freight-In
Definition
The shipping cost to bring inventory into your warehouse from suppliers. It is part of inventory cost and becomes COGS when the product sells, not a shipping expense.
Want a deeper explanation?
Freight-in and freight-out are very different costs. Freight-in belongs in landed cost and gross margin; freight-out to customers is a selling cost.
Mixing them is one of the most common errors in e-commerce books. Watch for: all freight booked to one "shipping" account, which distorts both gross margin and contribution margin.
Example
A $4,000 freight bill for a shipment of 2,000 units adds $2.00 to each unit's cost, which is expensed only as each unit sells.