I think a deposit is in order, just with the amount tuned.

I think it could be a sliding scale deposit $100 to list a product, and then scale up based on amount of inventory, customer reviews, etc.

If it's a $100 initial deposit that slides up to $1,000 based on volume, that seems pretty reasonable even for something small starting out.

There are other places to start off... also, it doesn't have to be $5K, just cost prohibitive to lose if a knockoff company keeps getting closed out on.

There are also other selling options when starting out... not everyone has to jump onto Amazon.

Can you name one?

I was on ebay, jet.com, walmart, staples, newegg, etc. Anywhere there was a third party marketplace system I was on there.

All of the non amazon marketplaces I sold on combined were a rounding error on my Amazon sales.

Not for running a normal business it isn't. A deposit would probably get rid of all the dropshippers, who are really just a form of arbitrage; I think that's probably necessary to get rid of the review chaos. People actually manufacturing their own goods ought to be able to find that kind of money.

However, if we're going to have deposits, there need to be absolutely clear rules on when they are forfeited, with a real, transparent dispute procedure.

Keep a percentage of gross to go towards a deposit and don't remit payment immediately on new accounts. Imagine a 1K deposit wherein only $200 was paid up front and the rest was paid in terms of 2% of sales.

Further if you spend a week selling counterfeits and as it turns out that you make 800 usd in scam sales. The 2% towards deposits might only be $16 + $200 deposit but if the seller hasn't been paid out yet its trivial to claim the entire $800 in sales as the forfeited deposit.

The seller instead of profiting $400-$600 is now out $200-$400 in inventory and $216 in deposit with nothing to show for it.

The deposit needn't be ruinous. Just enough to make being a bad actor not worth doing.

  $5k is a lot of money

That's kinda the point of fines, isn't it?