I heard a story over the holidays. They were talking about returned items.  They said most of these returned items do not go back to the manufacturer. Rather, they are sent to a warehouse, where they are sold for pennies on the dollar.  People will bid on them, and then go pick them up.  Then they resell them on Ebay or where-ever.  Some people are running small businesses doing this.  I was surprised at how much of this happens.