How do handle undeliverable packages sold through Amazon?

Per Amazon policies, the proper path to follow should be the following:

1. If you have not yet shipped the order you can reach out to the buyer by contacting them through the Buyer-Seller Messaging service to cancel this order and place new order for correct address. If the buyer is unresponsive, you can send a critical message.

You can refer to the following help page about how to send a critical message:

Send a critical message to a buyer
https://sellercentral.amazon.com/help/hub/reference/GRZ5Y5YEN9J84NAC

2. If the order is shipped, you can contact the carrier service and ask them to return the product and when the product gets back, you can deduct the restocking fee and refund the order.

This information is available under the following help page:

What should I do if I cannot fulfill this order because the address is undeliverable?
https://sellercentral.amazon.com/help/hub/reference/GRXAS2XTAYEF77BG#wjz_cjc_jcb-11

What do I do if the item is undeliverable?
https://sellercentral.amazon.com/help/hub/reference/201520550

3. If you have not yet shipped the order and the buyer says they cannot receive the order at the address they provided originally, ask the buyer to cancel the order.

Regarding the Late Shipment Rate issue, please provide information to appeal via the account health dashboard by using the Submit Appeal button: https://sellercentral.amazon.com/performance/detail/shipping?t=lsr&ref=sp_st_dash_csp_lsr