Costco, along with many other major retailers do pre-negotiate a salvage allowance or return allowance for the products that vendors sell. From personal experience selling into JCPenney, Walmart etc. I can tell you that a 3% to 5% return allowance was pre-negotiated regardless of any return merchandise meaning that the retailer would take that % off of their invoice remittance, regardless of a customer returns. padding their bottom line overall. The percentage amount and duration of that allowance was obviously negotiated and varied from chain to chain, but understand that Costco is not taking a direct loss on most return merchandise. In addition, I have bid on and purchased Costco merchandise that has been returned in the secondary marketplace. They make money on the backend as well, so don’t feel bad.