For example, if a custom returns a product that was opened but they claim was never used (worn in this case) you can’t sell it to someone else as a new item. With physical products these go through refurbishing channels if there are enough units to warrant it.
What if a batch of products is determined to have some QA problems? You can’t sell it as new, so it has to go somewhere. One challenge we discovered the hard way is that there are a lot of companies who will claim to recycle your products or donate them to good causes in other countries, but actually they’ll just end up on eBay or even in some cases being injected back in to retail channels through some process we could never figure out. At least with hardware products we could track serial numbers to discover when this was happening.
It gets weirder when you have a warranty policy. You start getting warranty requests for serial numbers that were marked as destroyed or that never made it to the retail system. Returned serial numbers are somehow re-appearing as units sold as new. This is less of a problem now that Amazon has mechanisms to avoid inventory co-mingling (if you use them) but for a while we found ourselves honoring warranty claims for items that, ironically enough, had already been warrantied once and then “recycled” by our recycling service.
So whenever I see “unsold” I think the situation is probably more complicated than this overview suggests. It’s generally a good thing to avoid destroying perfectly good inventory for no good reason, but inventory that gets disposed isn’t always perfectly good either. I assume companies will be doing something obvious to mark the units as not for normal sale like punching holes in tags or marking them somewhere]