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.
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.