What happened

Shares of toymaker Mattel (NASDAQ:MAT) plunged more than 5% in early Monday trading before clawing back to close the day down "only" 4%. You can thank Amazon.com for that.

This morning, website This.Just.In reported that "Product pages are now live on Amazon.com" advertising "several new AmazonBasics brand private label toys for toddlers and kids," potentially heralding a new product category for Amazon as it enters the world of generic toys and begins to compete with established toymakers like Mattel and Hasbro.

Jack-in-the-boxing glove

Amazon had an unpleasant surprise for toymaker stocks today. Image source: Getty Images.

So what

Mattel investors reacted strongly to this news (although curiously, Hasbro investors did not -- its stock closed mostly unchanged). But as the day wore on, even Mattel investors' worries appeared to subside somewhat. The reason for this -- the rebound in Mattel shares -- could be the fact that as This.Just.In noted, "We're only seeing a few product listing pages for AmazonBasics toys now" and "The toys are not shipping yet."

Now what

As a result, Amazon's foray into toys probably won't hurt Mattel immediately -- probably not before next Christmas season at the earliest. Nevertheless, This.Just.In opines that "We would expect Amazon to methodically ramp up its private label toy inventory" over time.

That means Mattel (and Hasbro, and other toymakers such as JAKKS and Funko) still have time to react to Amazon's incursion onto their turf. Whether they make the right moves in reaction to this emerging threat -- increasing advertising for their name-brand toys, for example -- will determine whether today's sell-off proves a blip, or the first sign of a larger trend.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Hasbro. The Motley Fool has a disclosure policy.