How can I add a contextual filter with taxonomy term name as entity reference?
The direct Product (which is a Taxonomy reference in your case) Contextual filter only works with term IDs, not their names. So you can make it work only if you choose the term ID in the validation settings.
To use the term name as the contextual filter you have to add the Relationship for the taxonomy reference field, which you seem to have done.
Now you can add the Term Name Contextual filter, from the Taxonomy term Category. (Remove the Contextual filter for the Product field that you currently have.) You didn't have the Term Name available under Contextuals before you added the Relationship. That Contextual will use the Relationship automatically.
When you add the Term Name contextual you will be able to set up the term name Validation, and you'll need to enter the term names in path arguments and in Views Preview field to test it.