A couple of things come to mind...
First, using Paypal gift to save a few bucks is not wise, for the seller or buyer. The seller should decide if they want to offer Paypal, and if they do they should reflect it in their price. Items will generally sell quicker and for a higher price with Paypal vs money order. It's worth the cost to me. Fred Miranda last week posted a thread in his buy/sell forum advising his forum members to never use Paypal gift. I'm guessing he's had a lot of scam victims come complaining to him.
Second, someone mentioned Amazon uses USPS for free shipping. I've bought hundreds of things through Amazon and most itns have been shipped UPS. Only very tiny items or Amazon Marketplace have one USPS.
Lastly, one thing that may have happened was an old label was left on a recycled box. I just had this happen with USPS. My wife shipped one things to my daughter priority mail, and she lives only about 150 miles away. The pack didn't arrive as planned. Two weeks later it showed up back here. I looked at the package and found that she never removed the label on the other side of the box where it was shipped from a vendor in China to me. So depending on which side of the box was facing up, it could have been going back and forth. I ship a lot and always make sure boxes are clean before labeling, and haven't had something get lost in 10 years.