COGS is the direct cost of the units that left the warehouse to fulfill orders in the period. The inventory-accounting form most DTC brands actually use is beginning inventory + purchases - ending inventory, which equals the cost of goods that moved from on-hand to shipped — it ties COGS to the inventory ledger rather than requiring a per-order cost lookup.
What belongs in COGS is the landed product cost: the supplier or manufacturing cost of the unit, inbound freight from the factory to the warehouse, import duties, and any per-unit assembly or kitting that happens before the unit is sellable. The shorthand is “what the product cost to land in our warehouse.” This is the line that sets gross margin, which is the first profitability line on the P&L and the ceiling on every downstream unit-economics number.
What does not belong in COGS is everything that happens after a customer places an order. Outbound shipping (the carrier rate to deliver the order), 3PL pick-and-pack fees, payment processing, and returns processing are all variable fulfillment costs that sit below the gross-margin line — they belong in the variable-cost stack that defines contribution margin. Folding them into COGS overstates product cost and makes gross margin unreadable.
The classification choice is the whole point. The cleanest DTC P&L isolates COGS as a product-cost line and pushes order-time variable costs into a separate fulfillment line, so gross margin and contribution margin each answer the question they are supposed to.