Yes, this would be considered inventory and cost of goods sold.  If the primary reason you collect income from your business is from the sales of merchandise, then you should use this section.

Your cost of the products you had on hand on December 31st will be your ending inventory.  The purpose of inventory and/or cost of goods sold is that the IRS does not allow items that have not yet been sold to reduce the income received during the year from other products.  Remember when dealing with inventory on your tax return, it is always your cost (not sales price or value) that is used. 

This can be completed in TurboTax, after signing into your return by following the steps below.

1. Click "Take me to my return"
2. Select the "Federal"  in the black navigation panel on left
3. Select Income & Expenses at the top
4. Select Self Employment Income and Expenses
5. Edit, then select "Add expenses for this work"
6. Select Inventory
7. Continue to review the inventory and purchases section
8. Click the images attached to enlarge and view for assistance.

Thanks for your answer. But what if I don't have the items on hand? I just order it from somewhere else when a customer buys from me. Would it still be considered as inventory? Thanks again for your help.

@pauline_iva  You would use the cost of goods with no beginning inventory and, if there is nothing on hand at the end of the year that was not sold, you would have a zero ending inventory.

Got it! Thank you so much for all your help. I appreciate it.

@pauline_iva  Wonderful! You're welcome and it's a privilege to help.