Did the package have any tracking that you (or they) can check?
Generally, I ask the buyer to confirm the address at which they were expecting delivery, to rule out the possibility they moved and provided me with an incorrect address or something. I also ask that they double-check with their post office to see if it is awaiting collection (sometimes cards are not left, or blow away etc) and that no one else could have accepted delivery and forgotten to pass it on.
If the addresses match and the parcel can't be located after the above, I let them know that I will initiate a missing parcel investigation with Australia Post, and that I will need to pass on all the addressee details so that the investigation can be conducted and so on.
I personally also either refund or send a replacement in the meantime, but if there is tracking that indicates it's awaiting collection, has been returned to you for some reason, or was indeed delivered, obviously a bit of further investigating needs to be done before any of those options.
