The U.S. Postal Service is in a tough spot. Increasingly pushed toward irrelevance in our digital society, it is bleeding money and seeing dramatic cuts in volume of mail handled. In 2008 the USPS saw the biggest decline in mail since the Great Depression, and racked up an expected loss of $7 billion. 

To reverse the decline, the USPS is looking hard at ways to revamp its identity and business model. Merely selling stamps and charging for shipping services will not keep the Postal Service afloat, especially not in the current economy.

In the past, the USPS has tried and failed to introduce and market non-postal products; some of these ventures were in retail goods, some in money order services. The Postal Service tried to work with the Mexican Postal Service and authorities to facilitate cross border transfers, but the pursuit failed and the USPS ended the attempt.

How can the Postal Service attract more business? It's looking at creating services for electronically-dependent consumers and promotions that will keep consumers from switching to private-sector competitors like the United Parcel Service.

The USPS has suffered massive financial losses in the past few years; the combined loss from 2007 and 2008 equaled roughly $8.1 billion, and current figures show that revenue is already down 8.4 percent for 2009. After implementing a routine price increase for shipping services of 5 percent as of January this past year, the USPS still needs new ways to increase revenue. Raising prices, reducing employees, and removing mailboxes and postal routes across the country leaves the Postal Service without wiggle room to cut more costs.

One new program specifically targets "smartphone" owners. The USPS is experimenting with a GPS tracking system that smartphone users can access at any time to track packages across the country. This is a good idea, but not revolutionary, and certainly not one that will recoup billions of dollars.

Any greeting cards with your stamps, today?

An idea with more promise is selling items that go well with its core product of stamps: greeting cards, for instance.

Taking the approach of today's supermarkets ­— which position bags of Tostitos right next to the salsa and avocados to spur impulse buys and a «one-stop shopping» mindset — the Postal Service is piloting a program to sell greeting cards in post offices.

In October, the USPS announced a year-long pilot program allowing customers to buy and send greeting cards in roughly 500 locations across the country. After the new year, the pilot program is hoping to expand to 1,000 new locations.

"Cards are incredibly linked to the mail," said Robert Bernstock, president of Mailing and Shipping Services. More than half of the 7 billion or so greeting cards bought in the U.S. are sent through the mail.

This is clever. What better time to dash off a quick note to grandmom than while waiting in line at the post office window? It's multitasking of the best sort. However, most people still buy their greeting cards at drugstores, grocery stores, and stores devoted only to paper products, like Hallmark. To be successful, then, the USPS must carry a big enough inventory for customers to expect that the card selection will be adequate.

In another attempt to increase business, the Postal Service has introduced shipping deals on high volume customers. The mailing promotion mainly targets people sending packages via priority mail. People who meet a certain volume of packages mailed will receive a discount. Think of it as the Costco of mailing; those who mail in bulk are rewarded with a price cut.

A Stormy Future

Even with the introduction of the Postal Service's new deals for customers, the financial losses the USPS has endured over the past few years have taken their toll. The Postal Service has postponed paying insurance liability to soon to be retirees from 2009 to 2010.

The Postal Service "has not settled things in the long term," said Robert Schrum from the Lexington Institute in an interview with OhMyGov. "I think that all they have done is postpone this year's obligation, but they don't have a long term fix in place. Congress will have to meet next year to determine a new payment schedule."

The futures of aging postal workers are at stake, and postponement is not a permanent solution for the USPS. Perhaps the most lucrative move the Postal Service could make would be to partner with existing government agencies to increase revenue and traffic.

In a recent article, Robert Schrum suggested that the USPS partner with government offices that handle licensing to help increase profits. Already some post offices have passport services on site. But motor vehicle departments, the Social Security Administration, and even the Internal Revenue Service could benefit from storefront presence in local post offices.

"Though the idea is hypothetical, a lot of licensing authorities rent store space and hire workers to take photos," Schrum said in the interview. These government offices "could do licensing operations in the post offices themselves so that they wouldn't have to pay rent. They could also remove the need for the [extra] workers."

The partnership is a smart idea and would remove the need for the DOL to pay for space that the government has already built. Schrum even suggested customers could pay traffic violations and renew licenses in the post office. This move would redefine the Postal Service across the country.

The USPS knows it is not a retail store, nor a money order service. But merging with existing government agencies will redefine the postal service in everyone's best interest. Taxpayers are more conveniently served, and the government can reduce spending on superfluous businesses. It's about time the Postal Service has a makeover that benefits everybody.