From what I've read, which isn't much as it's not a strategy that anyone selling one-off items could use. It relies on bulk-buying something that is a consistently good seller (say staples). Sell them for nothing in the hope that the buyer will buy other stuff "while they're there", at a price with some profit. The incentive to do that being the combined postage, which because the seller is sending large numbers of packages they can get at discounted rates.
By charging over the counter rates to the buyer, they claw back some / all ? of their loss on the staples.
It all seems a bit risky to me!