2007
Definition of F.O.B Free On Board
Posted by: Fashion06 in Daily Definition, Starting your own line |
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F.O.B is a shipping term often used in the apparel industry by the seller or supplier. When shipping goods fob lets the buyer know that your goods quoted price includes any shipping or duties and will be paid by the buyer upon arrival. Basically the shipping?expenses are transferred to the buyer and the seller pays for just loading the items and getting them to “x” location to be shipped (Transportation to point A). You are just stating the terms of delivery in an abbreviation.
This could be a great way to offer incentives and gain new?store accounts by offering free shipping, but keep it as a promotion only. Meaning not with every account you gain, because you?will be out of business before you know it?;) .?
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August 5th, 2007 at 8:26 am
When manufacturing your products, FOB can also mean the Buyer is responsible for ALL transportation/port/brokerage charges once the goods leave the factory where they were produced.
FOB pricing also assumes you pay all duties and taxes on goods coming into the country that you plan on reselling domestically
Another term we often see used is CIF (Cost including freight) which as you guessed, doesn’t include taxes or duty.
If you decide on making outside the USA, you can ask if the factory or agent offers LDP pricing (Landed Duty Paid ) which is price including duty, to the most convenient port closest to you. You are responsible for transportation charges from that port to your distribution location.
One Asian source I know, tells people unfamilair withe the term FOB, it actually means priced “from out the back ” of the factory.