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Locations are used by the platform to identify customer's billing and shipping address geo location. Geo location then can be used by taxation configuration or custom modules for fulfilment.
Each location is represented by state, which belongs to a country. Because this is a well defined geographic data it is shared by all shops hosted on the platform and therefore can only be entered by the system administrator. Once all locations are setup each shop can assign countries where it operates thus limiting the customer choice of the available locations during address book management.
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