Just adding my voice to emphasise the need of this feature for a small business. We store inventory in UK and EU. We prefer that Shopify accepts orders only for local inventory (UK to UK and EU to EU).
But when a UK customer buys a product that is not in stock in UK location, Shopify will still accept the order and put the inventory on -1 (minus one) because it is in stock in EU location. This requires us to ship the product across customs barrier costing a lot more in the process.
This happens even when there are no shipping rates defined for EU to UK zone.
Conversely when the product is in stock in both locations, Shopify often picks the primary location (which has a higher shipping rate to the customer’s address) even when a local location with free shipping has inventory. This leads to a lot of abandoned carts due to high shipping rates.
Overall, Shopify lacks awareness of customer location and its proximity to inventory locations leading to all sorts of mix-ups and bad customer experience.
High time this goes into the features list.
P.S. To my understanding even the Markets feature can not handle this yet and not very well when this is implemented.