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As I understand it they just stop there. They pallet stuff up and sell it in bulk to someone who then proceeds to part ways with it on eBay or something like that. I think most of the mass market companies do this. Costco is well known for this.
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At the online retailers I've worked at (not Amazon) returned items get split into a small number of groups.

A person returns a $5000 RTX 5090? A manager will be paged, who will carry it over to the high value items cage, in full view of the CCTV.

A person who returns a $5 bike light? And that person has also spent $$$$ over the years with a 0.5% return rate? Straight on the pallet of mixed returns without even opening the package.

Medium-value returns and customers with an eyebrow-raising return rate get a medium amount of inspection.

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If you own some floor space and want something to do with it then you can join the amazon SPN (service provider network) and offer international returns processor.

The returns processor either boxes up many individual items heading for the same destination into a Master Carton or arranges to dispose of the item somehow depending on how the seller wants their returns handled.

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Modern slave labour economics
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