There always is a viable business model. Brick and mortar stores have always assumed liability for the products they sell, even if they didn't make it.

They don't have to assume the whole liability - they can have a supplier contract that passes through all the liability costs (or part of it) to the supplier. In fact, as I understand, Amazon already does that. It's just that Amazon would become the first station to sue if the consumer is wronged. Nothing prevents the Amazon from passing the responsibility by either suing the supplier in turn or forcing them to join the lawsuit. What Amazon wanted is to be completely out of the picture, but the court denied them this. I don't think this invalidates the whole model - they still can act as a middleman, maybe just be a bit more careful with especially shady suppliers.

This strikes me as (yet another) instance of 'if you can't make it work, the business shouldn't exist.' If the business model really depends on the ability to sell bad goods without any blowback, it's a bad business.

I'm very sure there is, it's just that the commissions will have to reflect the necessary work to deal with potential customer relations issues.

Which is fair; it's just the cost of doing business. It's just that some merchants may reconsider whether it's a cost that's worth paying for working through Amazon.