"The bike baskets ship flat and are made of laser cut powder coated steel "

It just ships flat. It's not meant to fold/unfold as needed.

I think it's a great idea and looks way cooler than most baskets. Granted, small items would fall right out the side - but I get the impression that most of the target market for these would be putting a purse in there.

Definately easier and cheaper to ship than a normal basket. It's the Ikea mentality of flat packing your product to save money on expensive warehousing/shipping. These savings can then be passed on to the consumer - or added to the profit margin, depending on the market.