FOB

FOB Pricing Structure

Under FOB pricing, the manufacturer provides a complete price that includes raw materials, manufacturing labor, overhead, and profit margin. The buyer (brand or retailer) arranges and pays for international freight, insurance, customs clearance, and domestic distribution. This structure simplifies the buyer’s relationship with the manufacturer — a single supplier relationship with clear responsibility boundaries — but gives the buyer less control over material sourcing.

FOB Variants and Incoterms

FOB is one of many incoterms (international commercial terms) that define responsibility for costs and risk. Common variants include EXW (ex-works, buyer responsible for everything), CIF (cost, insurance, freight — seller arranges shipping), and DDP (delivered duty paid — seller handles everything). Fashion primarily uses FOB and variations that place significant logistics responsibility on the buyer.

FOB in Fashion Supply Chains

FOB is the standard pricing structure for most fashion wholesale production. A brand receives a quote for finished garments FOB Shanghai (for example), meaning the factory has delivered goods to a Shanghai port and the brand owns them and arranges logistics from that point forward. FOB enables straightforward supplier relationships and clear cost structures but requires the brand to manage complex logistics coordination and global freight purchasing.

OSF Perspective

OSF views FOB as a pragmatic standard for international fashion commerce. While it places logistics burden on the buyer, it simplifies the supplier relationship and enables professional logistics providers to optimize freight across multiple suppliers and consolidation points, creating scale efficiencies that individual suppliers cannot achieve.

Related Terms

Landed Cost  |  CMT  |  Incoterm  |  Lead Time

Notable Brands

Standard in fashion wholesale sourcing globally