I don't know what it's like now, but, when I worked at Best Buy in the 90s, we had a couple of shoulder height palletized bins in the back. If a customer brought something back with a "didn't work" reason, it went in the bin.
We threw items in the bin from a distance, so they were definitely unsellable. I'm sure that lots of merchandise that would have been functional/sellable ended up being thrown out.