Although they enjoyed possession against the already-eliminated Swedes, France were toothless in attack and extremely shaky in midfield and at the back.
"We were not strong enough in the tackles. I think Sweden played with a lot of heart, they gave everything, physically they were much better than us," Blanc said after France sealed second spot in the group on four points behind England on seven.
"We did not suffer up front, we suffered a great deal at the back and also in the midfield. Sweden had a lot of physical impact there.
"I'm going to look at the game again but I think we conceded too much space."
France could have fallen 2-0 down in the opening five minutes when Ola Toivonen and Sebastian Larsson easily got the better of the central defence.
Zlatan Ibrahimovic was then allowed too much space in the area to unleash a delightful acrobatic volley into the net nine minutes into the second half.
Sweden made it two in stoppage time when Christian Wilhelmsson hammered Andreas Granqvist's cross against the bar and the ball rebounded for Larsson to ram home.
Blanc hopes striker Karim Benzema can find some form after another toothless performance.
He said: "Like all goalscorers he needs to score goals. He wants to, he might be frustrated because he can't find the back of net.
"He tried a lot and could have scored but did not, like the other players. I hope he gets off the mark in the quarter-final against Spain."
Defender Philippe Mexes received his second yellow card of the Euros and will miss Saturday's last-eight tie with Spain.