I wouldn't say that your experience necessarially supports the selling of unmarked B-stock (what you are referring to as "seconds" is actually known as B-stock, even C or D in some cases depending on if the manufacturer has a grading system) as this practice is illegal. Both for the manufacturer that distribtes the B-stock as A-stock and the retailer, and the fines can be quite steep.
What your experiences do seem to support though is that Fry's is selling product from manufacturers that have both poor manufacturing processes and innadaquate, or possibly even a near-total absence of quality control on their product.
The latter explanation I can agree with, to some extent anyway. Frys does have a few house brands such as Airlink, GQ = Great Quality, and a few others whose names escape me right now, but I would recognize on a stroll through a store, where the quality can be hit and miss. Sometimes the prodcts are built by different contract manufacturers so the quality of one does not necessarially reflect on the other. Take GQ DVD+/-R's for example: some of them are no-name factories and the discs are only good as coasters, others are Sony 1st grades, hell, I even have a few old GQ 4x's that were made by Tao Yuden back in the day (Tao Yuden IS the **** when it comes blanks BTW).
Furthermore, generally speaking, the quality of low cost electronics has collectively plummeted over the last decade for various reasons, both manufacturing and design. Even the companies that used to make good equipment have gone to hell - sometimes even on the same product that used to be good. Take the Linksys WRT54G line - early versions were good, newer versions are junk. Don't even get me started on DVD players, DVRs and stand-alone DVD-Recorders...
Not all of this can be blamed on Frys - always best to do some research on the item you're buying.
Oh, and lastly, even though a good portion of the returns at Frys are due to PEBKAC, I always recommend that you never buy one of the returned prodcuts that has been re-sealed and marked down unless there is no other option.