Not sure I want to give out all of her product details just yet. But they are small artistic "trinkets" designed in Adobe Illustrator (which she learned to start her business).
At first, she worked with a US intermediary. She submitted her designs with colors to the company and worked with them to make sure the design could be fabricated. Then the US company submitted designs to the lowest bidder and sent her the first round of product. The defect rate was pretty high 30%+ but she ended up selling all the products in about 3 months. Then she decided to search for manufacturers on Alibaba. She went through 3 different manufacturers until she found the one she currently uses.
She was able to order 200 units (100 each of 2 items) from the US-based company for about $375. Packing envelopes, business cards, boxes and other packaging materials cost another $200 or so. $575 sounds about right for her initial investment. She also opted to use Shopify instead of Etsy (in the beginning, now she uses both). Shopify is $30 per month and a superior e-commerce platform.
With her current manufacturer, the quality is much better (<5% defect rate, and quality of items are at least 2x-3x better than her first round). She ends up paying about $100 per mold, and then about $0.75-$1.25 per unit so costs have gone down. FedEx 2-3 day shipping from China to USA ends up being about $100 for 600-800 units. Each item sells for between $8-$13. Free shipping if a customer spends a certain amount of money.
The best way to simplify packing boxes and shipping is to sell on Amazon. Yes, they'll take a cut. But what you do is pre-package all of your items and send them to Amazon, they handle their Prime Shipping. It is easier than packing 100+ orders on release night, but it does cost more money.
I would definitely go with your idea if it costs less than $1,000 to get started. We've put in about... $3,500 total and the total revenue is greater than $10,000 at this point, and increasing with each product release.