Amazon gives non-Prime members free shipping at $35 or more of eligible items. Instead of simply letting users get the product with free shipping, they’ve added a discount that prices it exactly one cent below the $35 limit, while only subsidizing the price with $3.38, which is about half of what they’ll then charge you for shipping.
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Assuming you mean discount, they pay the third party the agreed value, and give the discount from their percentage.
Let’s say the third party lists it for $35.50
Amazon applies a discount of $0.51 cents to bring it under the $35 amount for free shipping.
Someone buys it for/that $34.99 but Amazon still pays the original seller based on the seller’s original listed price.
And so Amazon subsidised it, but still came out net benefit because the amount of the subsidy was less than shipping cost, or less than the price of some other item the customer now had to put in their basket to get over the free shipping threshold again.
If the seller is an affiliate that’s covered in their contract. The seller won’t see a loss in profit, but Amazon will rake in a few dollars for shipping fees.