This game has been going on for some time on eBay.
The problem is this. EBay/Paypal fees.
Sellers have been padding shipping for years to cover those fees.
During the past year, eBay has been giving higher search position for those sellers offering free shipping.
On other forums I have visited, some of the members have been running the numbers. They have determined that in a lot of cases, the free shipping items were actually costing buyers more.
And here is why and to eBays benefit.
Lets say someone sells an item for .99 with 11.99 shipping. Their ebay FVFs are about 9 cents and total Paypal is 68 cents.
If they go the free shipping route:
Their eBay FVF is about 1.56 with Paypal at .68.
So what the seller will do is sell the item for 14.95 free shipping.
Another example is:
Lets say a seller wants to sell an item for 100$ He sells it at a fixed price for 79.95 at 19.95 shipping. Just about a 100$.
His FVF is 8.15 PP is 2.62
Now if he sells it with free shipping he will sell it at about 104.95 to cover the extra fees.
I may not have the numbers perfect but you can see what happens.
EBay gets the best of the deal as they are getting more fees. And the buyer is actually getting the worse of the deal.