The journey of returned items at Costco is not so simple. The type of product, whether it is perishable or not, and its condition determine where it will go.
When an item is returned, Costco employees assess their condition. If the product is non-perishable, unopened, and in perfect shape, it can go right back on the shelf.
Some items, like personal hygiene items, are unsanitary for resale; these automatically get recycled. With the exception of some canned foods, returned food cannot be resold.
However, Costco will donate any returned food that is unopened and non-perishable to an organization that distributes the food to unhoused people and shelters.
Costco operates massive return warehouses where they determine if used items can be sent back to the vendor. Items that cannot be sent back are often sold to third-party sellers.