1099- misc. box 7 payer made direct sales

Yes, it would be a Cost of products for the payee.

"Beginning in 2020, box 7 will be used to indicate the payer made direct sales of $5,000 or more of consumer products to a buyer. These products are generally direct sales of a product intended to be resold. There are numerous situations this applies to but the best illustration of using box 7 is multi-level marketing companies. These companies generally sell products to their sellers at a wholesale price and may also pay the sellers some form of compensation in the form of bonuses, commissions, or prizes. In the past, all this information was reported on the 1099-MISC. With the recent change, MLM companies will be providing the 1099-MISC with box 7 checked and a Form 1099-NEC.

From a tax reporting perspective, this box is for informational purposes only as the buyer will be including the purchase price of these items on their tax return – typically as an inventory expense.

In previous years, this information was reported on the 1099-MSIC in box 9. Nothing has changed aside from which box is used to provide this information to the buyer."