If it's a product catalogue, would your company not already have this data in Excel format? How else would they keep track of the SKU numbers and quantities etc?
I think the process you mention above is more or less correct but you should be able to avoid the whole 'copy from InDesign, paste into Excel' step.
Are there any specific questions you want answered?
This task may require a plug-in to Adobe InDesign as I don't think it's possible from InDesign "off of the shelf". I say this because:
- Data Merge will only import .csv or .txt files; and
- (in my experience) Placing an excel file into InDesign does not allow that file to be linked.
This said, the data merge feature of InDesign is... basic. There are many plug-ins on the market that offer better solutions to InDesign's Data Merge feature that may offer what the OP wants, but I haven't used them and can't recommend any particular brands. My suggestion is to visit http://www.adobe.com/products/indesign/indepth.displayTab3.html and look for the providers that have their own Data Merge solutions.
In theory, at least, one can set the prefences to allow linking to an excel file, and change them back after placing, so that other files do not link, if that's the way you like to work, but it's important to remebeber that updating a linked spreadsheet takes it back to the excel formatting unless you use Table Styles.