> I would imagine the item now has to be sold at a massive discount, recycled, or simply thrown away, so to them it's probably 100% loss when you include things like shipping.

I've received numerous "new" items that were previously opened and returned merchandise; things like a vacuum with hairs in one of the cleaning attachments. Same with a pair of headphones. I'd be happy if there were a discount for accepting a minimally used item. As it is Amazon just hopes you don't notice.