When you first set up your store, you will be asked to fill in a Reference Location. This can be a postcode or a state, depending on which eBay site your store is on.
See Settings > Stores and Listings
For example, if your eBay site is ebay.com in the United States:
or ebay.com.au in Australia:
This reference is used to fix a point where all shipping is calculated to that location. The purpose is not to get an exact shipping cost all over but to fix one point and the shipping cost of all sellers to that location.
So instead of the exponential complications of calculating to every possible location for you and all your competitors. It would be much easier to calculate to one fixed location.
But to that one reference location, everyone is on a level playing field.
So which Reference Location would be a good location?
- You would get the best average by using a central location.
- The better alternative is to pick the location you have your most sales from. You want to protect your prices especially there.