You should cancel an order inside your sales channel (Shopify, Amazon, etc) where you're also able to process refunds.
When an order is cancelled on your sales channel, it's status will update in SKULabs as soon as we see this change during order sync.
When an order is cancelled in SKULabs either manually or when we detect it's cancelled on your sales channel, we'll warn anyone trying to create a shipping label for it and otherwise discourage mistaken processing of the cancelled order.
If you've already created a shipping label for a cancelled order, you will need to pull the package from the staging area in your warehouse and void the label manually. View your archived tab for cancelled orders with "# of shipments" above zero to find your cancelled orders with shipments.
If you use scan based deduction, make sure to create an RMA on the order to ensure that you have received orders stock properly back into your inventory.
Tip: Use the "View [Amazon] Order" link in the order's menu to quickly find the order on your store from within SKULabs.