Luckily I didn't have a high percentage of returns, the odd one or two which was good. I think it's the 'risk' a seller has to take when selling a product. So you have to cater for that in the price and profit margin when selling so to cover yourself for situations like this.
It was ok for awhile but too difficult to manage as having a young family and all my income relying on selling MP3 players, it was too risky. So if you're going to do it, you've got to consider that too.
There are some companies that does 'drop shipping' which means you sell the product, once you get an item sold, go to their website, place the order and have the item shipped directly to the buyer instead. So they send it from their factory directly. Not sure then who is responsible for the warranty so you'll have to check that out.
Hope that helps.