I think the gift is the time and effort that goes into a handmade item. It's three minutes to click and buy something online for someone, and four hours to make a purse. Either item might be a mistake in style, color, etc., but knowing someone took the time to do something special they thought I would like is worth the gratitude.
However, many people don't know what goes into a handmade gift and would likely be shocked at the time and effort, not to mention the money, it takes to put together a gift like this.
It's disappointing for the giver, very much so. But forgivable, and a lesson learned when it happens.