Freight is a significant part of the cost of goods sold. According to the 2000 NACS College Store Industry Financial Report, the average freight charges for stores serving four-year institutions are 1.36% of net sales.

Free-On-Board (F.O.B.)
F.O.B., followed by destination or origin, indicates the place at which the title passes to the retailer.

F.O.B. store (or destination)

• The vendor pays for the freight costs.
  
  
• The vendor holds title to the goods while in transit.

F.O.B. store (or destination) freight collect

• The store pays for freight costs.
  
  
• The vendor holds title to the goods while in transit.
  
  
• Since stores seldom receive free freight, this is the most common practice.
  
  
• Since the store is paying freight, they can and should designate the means of shipping.
  
  
• This allows the retailer to control shipping costs, and not have to count the product as inventory
  
  
• If somethings happens to the shipment while in transit, the goods do not belong to the retailer.

F.O.B. origin

• The store takes title to the goods at the point of origin.
  
  
• The store either pays the freight costs directly or the vendor passes the costs to the retailer in the invoice.
  
  
• These terms may make it difficult to control the method of shipping and to verify that the store is charged the correct amount for shipping.
  
  
• If the terms are F.O.B. origin, the retailer should insist the shipment come via their preferred carrier and the shipping terms be freight collect.