blkcloud,
You are misinterpreting this.
It's the same when you get "free" shipping from a company as a special or for buying over a certain amount of product.
The invoice will list shipping as "free".
Rest assured neither UPS, nor FedEx delivered it for free.
Same is likely for the $2.76 charge, the company she bought it from may or may not do enough business with FedEx to get a break, even substantial (we do the same thing), but they are still most likely subsidizing the shipping cost as a come on.
If they are doing so for a $3.95 product they won't stay in business long unless there is more to this than just what you have posted.
Plenty of dotcoms tried this strategy of losing money on the shipping end in an attempt to gain market share.
QVC originally offered "free" shipping for any and everything people ordered and wanted to send back no questions asked.
Outpost.com for instance initially offered free NEXT DAY AIR delivery via Airborne on all shipments (I loved it), they became successful and ultimately brought their shipping policies back to reality (sigh).
Most just went belly up trying this rather than succeeding at gaining enough market share to survive.
Enjoy the savings where and when you can.