A miniature mailbox sits on the counter of the Ewell Post Office. (Mark Wilson/GETTY IMAGES)

The U.S. Postal Service (USPS) is at risk of shutting down sometime later this year as it quickly runs out of cash and piles up billions of dollars in losses. Its business model is clearly in need of a radical overhaul. Not only is the USPS facing a revenue decline due to the popularity of e-mail correspondence and electronic bill-paying, it must also confront a prohibitively expensive cost structure as the result of a highly-unionized labor force. Combine those two factors with regulatory inflexibility when it comes to changing the way the USPS does business, and you can understand why sentiment is so negative these days.

The current options being bandied about thus far — such as suspending Saturday delivery, shutting down thousands of post offices around the country and laying off 120,000 unionized workers — have been unsatisfactory at best and political suicide at worst.

To overcome the challenges it faces, the USPS must transform itself into a technology and innovation powerhouse. As even critics of the USPS must concede, the Postal Service has survived every major telecommunications innovation over the past 100 years, including the telegraph and the telephone. There is no reason to believe the USPS cannot survive the Internet.

The USPS cannot move into new business lines or make radical changes to its business model without Congress’s approval. This includes offering advertising on its delivery trucks or delivering beer and wine to local addresses. Even with these limitations, however, there are ways to embrace a truly digital mail system and find innovative ways to reduce the carrier costs of delivering mail to physical addresses.

Internet-enabled communication — specifically, e-mail — is not going away anytime soon. The USPS may have been late to the e-mail game, but there are still ways to profit from the way that people use the Web. Some futurists have even called for the creation of a national e-mail address that people get when they are born, similar to a social security number. Instead of a Gmail address, for example, people would have a USPS address. In addition, each branch location of the USPS could offer fee-based communications services from an Internet-enabled kiosk. Stopping in to buy a pack of stamps for snail mail? Why not conduct a quick Skype video chat session on a government-owned laptop for a small fee?

As part of being a modern communications giant, the United States Postal Service must also embrace the digital mail revolution, which is making it possible for participants to receive digital versions of real-world, physical mail. Two of the more popular options for “digital mail” include Zumbox and Earth Class Mail. In places like Washington, DC, New York City and San Francisco, it is now possible to participate in a "paperless alternative to the postal system." Anyone with a physical address and a virtual e-mail address can receive digital mail from government agencies and corporations around the country.

Of course, the “paperless” mail system does not apply to care packages and gifts that you might want to send to loved ones across the country throughout the year. If the USPS is really intent on wringing costs out of the system, it will re-think the power of logistics. Amazon, recognizing the impact that a potential USPS shutdown would have on its ability to deliver packages around the country, has been experimenting with a "locker box" operation at 7-11 convenience stores in the Seattle area. Customers expecting a package would need to stop by an ATM-like installation at a local 7-11 and pick up the item from a special locker box with a pin code. In a similar way, the USPS can embrace an expansion of its services to kiosks within different physical retail locations, while shutting down more expensive branch offices.

Certainly, the problems facing the USPS are historic in scope, but they are not insurmountable. A true solution will require more than just a clever re-branding or an advertising campaign for people to send more printed mail — it will require the USPS to transform itself into a 21st century communications giant. As Monocle pointed out last year, Swiss Post underwent a similar transformation into a media and technology brand, with much initial success. In an era when e-mail and text messages have largely replaced physical letters as the preferred means of communication, it makes sense to re-imagine the USPS as a 24/7 communications giant staffed by hundreds of thousands of Web-savvy workers.

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