Why is the 737 MAX 7 selling so poorly? The 737 MAX 7 is the smallest of the four major variants in Boeing's 737 MAX product line; it is intended as the successor to the highly-successful 737-700, and features a higher fuel efficiency, considerably greater capacity, and increased range compared to the 737-700.  Yet it is selling very poorly, with only 58 orders so far - and 23 of those 58 orders, from MAX 7 launch customer Southwest Airlines, have been deferred until the mid-2020s, raising the possibility that Southwest might cancel those 23 orders entirely.

Why are the airlines which enthusiastically jumped at the -700 balking at its successor, despite its being the longest-ranged 737 ever (the MAX 7 can fly for 7,130 kilometres before it needs to refuel), thanks to its increased fuel efficiency, and having a capacity of 138-172 passengers, as compared to the -700's 138-140 passengers?
There are two reasons: the market changed, and seat economics favor larger aircraft.

The NG models were designed in the early 1990s, before much of the dramatic change in the air transport market wrought by deregulation and ascendancy of LCCs. Southwest for example, was using high frequency of narrowbody aircraft to attack the network carriers and drove the extinction of widebodies in domestic US air travel. Since the early nineties, airline traffic has more than doubled depending on how you count, and there is a maximum frequency that is appealing to travelers. If you have four flights a day on a particular route and you double traffic, you might decide that six is enough and use larger aircraft. 

This is what Southwest is now doing, replacing -700 aircraft with Max8s. The Max8 acquisition and operating cost is only about 10% higher than the -700, but its passenger capacity is 25% greater. The math makes the smaller aircraft unusable, given that market demand now supports the larger aircraft. Ryanair came along later than Southwest and went straight to the lower seat cost of the larger aircraft. This is why even smaller aircraft like the Cseries are in trouble, forcing Bombardier to sell half of the program to Airbus for nothing.