As the consumer, you went on to buy that on sweater that is $45.99, but now you see that you only have to spend $50 to get free shipping! So what do you do? Of course you aren't going to pay the $7 shipping charge, but rather buy the shirt you debated on getting that costs $20, because at least you are getting something with that extra money spent - not just spending it on shipping. And just like that, your order increased from $45.99 to $65.99, but hey, you got free shipping...
Not only does that nudge people to buy an extra item, but it allows people to act as if they were shopping in store and able to try everything on. Since there is free shipping and returns, you might as well order everything you are even thinking about getting, and then you can try it all out and send back what you don't like. Psh, chances are you will like most of it. More often than not when I myself have done this, I end up keeping more than I originally planned because I have already spent the money AND it's just so much better in person.
The power of this one little nudge is becoming increasingly popular for todays online shopping. Companies know that without a doubt, you will end up spending more than originally planned, and the shipping costs them next to nothing. They are more than willing to pay the extra cost to nudge you to tack on that extra shirt you thought you might like.
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