What counts as Cost of Goods Sold?

The cost of the things you actually sold — not everything you spent to run the business, and not the stock still sitting on your shelf.

Cost of Goods Sold is what the items you sold in this period cost you to acquire or make. Two words in that sentence do most of the work: sold, and items.

Stock you still hold is not COGS — it is an asset. And costs of running the business rather than producing the goods are operating expenses, not COGS.

What goes in

What you paid for the product, or the materials and direct labor to make it.
Freight in — shipping to get inventory to you. It is part of what the goods cost.
Import duties and customs on those goods.
Direct packaging that is part of the product itself, like a retail box.

What does not

Marketplace fees. These are the cost of selling, not of the goods. An operating expense.
Shipping to the customer. Fulfillment, not acquisition. (Some sellers report this inside COGS by convention — pick one treatment and stay with it, because switching mid-year makes two periods incomparable.)
Advertising, software, your accountant, your time.
Inventory you have not sold yet. This is the big one, and it has its own article.

Why the line matters

Gross Profit is Net Revenue minus COGS, and it answers a different question from Net Profit: is there margin in the product itself?

Put marketplace fees in COGS and Gross Profit falls — you are now measuring the product and the channel together, and you cannot tell which one is the problem. Keep them separate and the report answers two questions instead of one:

Thin Gross Profit → the product is priced wrong or sourced badly. Cutting overhead cannot fix it.
Healthy Gross Profit, thin Net Profit → the product is fine; the cost of selling and running is eating it.

Those lead to opposite decisions. That is the whole reason the line exists.

The rule that keeps it consistent

Ask: would I still have paid this if the item never sold?

Money spent buying the item — you paid it regardless, and it stays on the shelf as inventory until the sale, then becomes COGS. The marketplace's cut only exists because a sale happened, and it is not part of what the item cost you. That is the split.