I think he was saying that a tiny USB PacMan light is going to be so small as to not actually cost $7 to ship it.
Even a 1 pound ground package will be cost something close to $7-10 and probably more if it is any distance. UPS and Fedex don't deal in weights less than a pound - they round up to the nearest pound. You don't have to take my word for it. Go ahead and try to get a better price from Fedex or UPS. I promise you that you cannot do it.
It should be about $3 or less.
It isn't $3 and won't be unless you ship a HUGE (meaning many tens of thousands) number of packages. The only way you might get a shipping cost that low would be to ship it in a padded envelope using first class mail via USPS with no tracking. I've been shipping via UPS and Fedex for literally decades. Your perception of what it should cost to ship doesn't match reality.
The prices are already marked up so fucking high I can see up Ms. PacMan's skirt, they can afford to let a couple of small items ship for free
High prices does not mean they are necessarily profitable and no it doesn't mean they necessarily can afford to ship stuff for free. Maybe they can but you simply don't have the information to make that judgement.
There are a couple of assholes sellers on Amazon charging $18 to ship a fucking $7 item, but for the most part Amazon ships stuff for very little, or free.
There is no such thing as free shipping. If it is "free" then it is simply rolled into the price of the item, possibly at the expense of the profit margin of the vendor. Companies like Amazon get good shipping rates because they ship an enormous volume of packages. I use their Prime service and it's great but I have no illusions that the service is actually free of charge.